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SOUTH WEST ACCOUNTANTS URGE “OFFSHORE” CLIENTS TO CUT THEIR UK TIES TO SAVE TAX

Court case unleashes tax-threat for pensioners and business owners who have moved abroad

Publicity surrounding Lord Ashcroft‘s non-dom status will “fuel the fire”

Thousands of South West business-owners and pensioners, who now live abroad, face huge tax bills if they don‘t cut their ties with the UK, according to an international tax expert.

The warning follows a Court of Appeal decision that Robert Gaines-Cooper, a 72 year-old based in the Seychelles for many years, could now face UK tax demands dating back to 1993.

Pippa Clarke, an international tax specialist at South West accountancy firm, Bishop Fleming, said:  “There is no doubt that the taxman is taking a much stronger interest in the huge numbers of ex-pat Brits who now live abroad, many of whom run a business from their off-shore base.

“The South West probably has a higher proportion of these people than most other regions, and we have successfully advised a large number of them.  In addition to the technical issues, a core element of reducing their tax exposure is how they have arranged any remaining links to the UK”, said Ms Clarke.

The recent Court of Appeal decision noted that Mr Gaines-Cooper retains strong links to the UK, where he still owns a house in which he keeps his art collection.

“The massive publicity surrounding the ‘non-dom‘ status of Lord Ashcroft, deputy chairman of the Conservative Party, may also fuel the fire of HMRC‘s new focus on ex-pats.  Keeping a car, a mobile phone account, or a club membership in the UK could be enough to trigger a demand that they pay UK taxes”, warned Bishop Fleming‘s Pippa Clarke.

“It is still possible to achieve a non resident status – what this case shows is that more care is now needed and each set of circumstances has to be considered on its facts.  One option is to leave the UK for the purposes of a full time contract of employment abroad which spans at least one full tax year.

“Alternatively British citizens must cut ties as far as possible and should not return to the UK at all in the first tax year to escape the HMRC tax net, and they must live abroad for at least three years to avoid UK income tax – and five years to avoid capital gains tax.  Cutting other ties should also be considered.  This might include resigning any UK directorships and club memberships, transferring their main bank account, and getting the electoral register to entitle them to a vote from abroad”, Ms Clarke advised. 

ENDS    9th March 2010 

For further information please contact David Sturgess, Sturgess Van Damme, on 01275 349 011 or email david@strugessvandamme.co.uk