Has your client actually left the UK?
The tickets are bought; bags are packed – is there anything that they may have forgotten?
HM Revenue & Customs!
It is all too easy to forget HM Revenue & Customs (HMRC). Part of the reason your client is leaving the UK may be to escape the taxman – that is, not having to do a tax return each year. But is that right or maybe they haven’t left the UK (for tax purposes)?
Avoiding an unwanted tax investigation
In this day and age there is a lot of Big Brother (and I don’t mean the TV show). People are tracked through airports, in and out of countries and then there is the Common Reporting Standard (CRS).
CRS is the automatic exchange of financial information between most governments in the world with the exception of just a few countries for example, North Korea, Columbia. So, unless your client is seeking that new life in the sun in those few countries, Big Brother is still watching them.
If they haven’t told HMRC that they are leaving, they will nevertheless keep in touch with them if they have been required to complete a UK tax return each year. That’s because HMRC will have had no reason to update their tax file.
Domicile and residence
For UK tax purposes, it is difficult to change a taxpayer’s domicile and separately anyone can be resident and taxable in more than one country at the same time.
A number of UK taxpayers have been caught out by these two concepts. As a result, these taxpayers may just get a “nudge letter” about the interest earned on their new bank account in their new country for example.
Some taxpayers are cautious and do not sell the UK home – just for now. Then they realise the UK is no longer for them so after say 6 months they decide still not to sell but to rent out the UK property instead – the UK property is in a nice area, and they have been approached through family and friends to rent it out. But for whatever reason, they forgot to declare the UK rental income to HMRC.
Knock, knock
In this typical scenario, taxpayers can get caught out and find themselves under investigation and facing not just the tax, but interest and penalties. HMRC may be able to contend that the UK rents are taxable in the UK let alone where the taxpayers are now living.
Help is at hand
Our focus here is on the past and the UK tax system – not tax planning nor “overseas tax”.
If these are the circumstances that your clients find themselves in, help is at hand.
By taking action now and before HMRC tracks your clients down, I can almost certainly reduce the tax penalties. Depending on all the relevant facts, I may even be able to offset some of the tax in one jurisdiction against another.
Don’t leave it too late – Big Brother is watching your clients. Contact me for help and advice.