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Uk Overseas Tax Ruling


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E-Bulletin 108 – Residence Rules - A Considered Opinion

We recently reported on a ruling regarding Mr Gaines-Cooper and UK residence rules. Whilst there has been tremendous interest in this story, many press reports could be seen to be 'scare-mongering', causing unnecessary concern for British expats.

In fact, the latest Gaines-Cooper judgment should reassure British expatriates. The ruling found, unanimously, that UK residence rules provide accurate, reliable and (in certain circumstances) binding guidance. The Revenue has not changed the residence rules or covertly changed approach. As we have reported before, the taxman has certainly increased the level of scrutiny on non-resident taxpayers, but the approach has been consistent with the published guidance and the precedent set over many years.

However, a couple of important points have been highlighted by these recent events.

Firstly, the ruling confirmed that if a taxpayer leaves the UK for full-time overseas employment, which lasts for one complete tax year, and remains within the standard visiting limitations, that person will be non-resident. Do remember that any work duties performed in the UK must be merely incidental to those performed abroad. It is also clear that having a home, family and regular return visits to the UK (within the guidelines) will not impact non-resident status. This is very good news and a welcome clarification which will set many people's minds at rest.

Secondly, the ruling confirmed that if a taxpayer leaves the UK for any other reason, the 'non-resident bar' is set at a much higher level. Those who fall into this category need to demonstrate that they have clear break from the UK. This would normally involve giving up a home and breaking links to clubs, financial, social and family ties. Clearly it is not enough to move abroad purportedly for permanent residence without a full time overseas employment and yet leave close family (spouse and dependent children) in the UK, or to keep a property in Britain that is used regularly.

This is bad news – many expatriates are retired or work part time but have maintained active ties to the UK - such as a property or regular visits to immediate family. The ruling is explicit in saying that unless a clean break from the UK can be demonstrated, there is a presumption that UK resident status will have continued. Emboldened by this, it may be that the taxman increases scrutiny of non-residents in this category, especially those who are very wealthy.

In short, anyone who is not in full-time overseas employment and who maintains ties to the UK needs to think carefully about their position and what modifications may be in their best interests. Every case needs to be reviewed on its own merits.

Thanks for posting that,clear and helpful

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  • 3 weeks later...

With these changes its past time for me to get my act together on this myself.

I've been putting it off. I hate this stuff :)

To date my nose is clean, but I pay a lot more tax than I need to I think, and it looks set to go a lot higher.

I am an NZ born, NZ resident up to 6 years ago with dual UK/NZ passports. I work on extended (1yr+) contracts in the UK, but otherwise live, but not yet work pretty much anywhere else. I have no ties in the UK, having worked there for 15 months in 2007-2008. Only worked, no ties or girlfriends or anything else. I don't even know anyone to forward a replacement cash card to me :D

Can somebody point me to a good thai/uk tax and company advisor here in Chiang mai so I can set things up properly?

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I read an article this morning that talked about likely aspects of the UK budget and unfortunately I can't find it again - the article suggested that a mandatory residency test would be established after the budget and that, wait for it, the UK would almost certainly move to the US tax model within the next three years where people are taxed based on their citizenship, regardless of where they live. I'll look again for the article and post it if I find it.

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I read an article this morning that talked about likely aspects of the UK budget and unfortunately I can't find it again - the article suggested that a mandatory residency test would be established after the budget and that, wait for it, the UK would almost certainly move to the US tax model within the next three years where people are taxed based on their citizenship, regardless of where they live. I'll look again for the article and post it if I find it.

I read an article, linked on another thread on TV that this would not be established.

Typical Tory scaremongering during election run ups.

Edit: Given the Gaines Cooper ruling, wouldn't voting be considered as having a direct tie to UK?

Edited by PattayaParent
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I read an article this morning that talked about likely aspects of the UK budget and unfortunately I can't find it again - the article suggested that a mandatory residency test would be established after the budget and that, wait for it, the UK would almost certainly move to the US tax model within the next three years where people are taxed based on their citizenship, regardless of where they live. I'll look again for the article and post it if I find it.

I read an article, linked on another thread on TV that this would not be established.

Typical Tory scaremongering during election run ups.

Edit: Given the Gaines Cooper ruling, wouldn't voting be considered as having a direct tie to UK?

I think it's naive to think that the US system of taxation based on citizenship will not be introduced at some point, perhaps not within three years but certainly within five or seven years.

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I file a tax return every year because I still have a property in the UK that I rent out. I don't spend longer than a month in the UK in any given year.

maybe its time to offload it.

I thought that someday my "Thai Adventure" would come to an end and I would go back.

However after nearly 7 years I think it highly unlikely, but the rental returns are good , better than if I invested that money elsewhere, plus I want to leave an inheritance for my 3 kids.

it's a difficult call.

We are easy pickings for the tax man if he really wants to make some extra revenue

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This could be very ugly, especially at the higher end of the NW chain.

It's generating a huge amount of interest - I've just written an op-ed piece for The Nation on this and Bangkok Post are covering it too.

We're flying a UK Tax & pensions expert here next week and most of the sessions are booked out. There's still psaces available for the Wednesday morning breakfast though which I'm happy to offer free to ThaiVisa readers, while there are still spaces. PM me if you want any details.

Cheers,

Paul

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