bobwilson

I've read a few posts on here, and the general understanding is that non-residents don't have to pay tax on any income sent to a UK bank account.

I'm sorry to say that this is no longer guaranteed.

HMRC has changed their interpretation of their own rules recently. They are now able to argue that you still have to pay UK tax, even if you live overseas for more than 275 days a year.

http://business.timesonline.co.uk/to...cle7029806.ece
Robert lived abroad for over 30 years. HMRC recently charged him UK tax because he has a house and didn't cut ties with family in the UK.

HMRC back-dated his tax for almost 20 years, which is another re-interpretation of their rules which state they can only back date tax for up to 6 years.

According to HMRC's own guidlines, they have the power to consider you UK-resident and subject to UK tax if you have a UK bank account or a house or family or friends in the UK. There are no hard 'rules', it all depends on how the office guy at HMRC feels.

It's important that we all need to be aware of this because it effects all of us little people as well. Be warned, particularly if you're sending money to your UK bank account and/or if you own a house back in the UK.

iaink

Non UK , or non canadian residents?

It sounds rather like the idea of Canadian tax residency and ties.

Surely the purpose of the P85 form is to iron all this out ahead of time?

bobwilson

UK. Apparently not, even if you fill out a P85, according to the IR20 and HMRC6 guidelines, HMRC can still consider you UK-resident for tax purposes if you have family ties in UK.

manny1980

If you are lawfully paying taxes in country you reside in, then it would seem unreasonable to be double taxed. I think the situation mentioned here is more concerning for those who make income in the UK and not report it or pay taxes on it either to the UK tax officials or whichever country you are residing in.

J.J

The article linked to by OP indicates how this subject had significant ties and family in UK and as I read it was super rich and playing the residency loopholes to avoid UK tax and therefor in my opinion a valid target for HMRC.

bobwilson

Yes, this is my worry. According to their guidelines, HMRC can charge you tax just for not cutting ties with parents in the UK.

manny1980, there are double-taxation treaties in place with many countries, you will only pay the higher rate of either country. However, if you're resident in a country with less tax or no income tax for example, you could find that you're back-dated with UK tax even though you're not resident in the UK.

The example may be regarding the super-rich, and it's easy to lose sight of the rules when reading about the wealthy, feeling jealousy is a natural human emotion, but since that test case, HMRC won't care how much you're earning, whether it be £10,000, £30,000, or £200,000, it applies to all of us.

According to HMRC's IR20 and HMRC6 guidelines, the fact that you're in UK for less than 90 days a year does not guarantee non-resident status.

bobwilson

I don't mean to sound argumentative, but that sounds a little like jealousy I don't intend any insult, it's perfectly natural

However, that was what's known as a 'test case'. HMRC won't have any problems targetting the less wealthy of us, me included, using the same arguments they did with his case.

According to HMRC guidelines, if you live abroad, you can be taxed by the UK authorities simply for having ties with parents in the UK.

Pistolpete2

I've been using the Gaines-Cooper case as a extreme example of residency elsewhere on these forums. To me it is important to read through the specifics of this case, such as the fact that he traveled to the UK in such a way as to at least attempt to get under the days of residency "radar" by arriving one day and leaving the next*. Another key point is that he owned and lived in a house prior to his "leaving" and never disposed of it as his family continued to reside there.

Hence the family ties bit that suggests that he did not in fact ever leave the UK in the first place for tax purposes despite the 91 days "rule".

Somebody who does not live a similar lifestyle keeping an abode and family in the UK while at the same time moving around with apparent intention to avoid paying very significant amounts of tax is very unlikely to attract interest from HMRC, IMHO.

Wealthy individuals such as Guy Hands who have left the UK in recent years for tax reasons have been very clear that they must sever all family roots.

From the Times:

Feb 6th 2010

“My residence in Guernsey is real, not a sham or a mere moniker. I have moved my belongings there from my former home in Kent,” Mr Hands says in a legal declaration.

Since setting himself up in the Channel Islands tax haven Mr Hands has not set foot in the UK and has “no intention of doing so until I have been out of the UK for at least three years”.

Mr Hands has not visited his parents, nor his wife and children in Britain, and has “declined numerous invitations to dinners, to speak at conferences, to accept industry awards”.

*This trick has been dealt with under the revised residency rules.

JAJ

If they have breached the tax law, they can be challenged in a court of law. Unless there is more to the story than reported.

bobwilson

1 Do parents and siblings count as family ties? I ask this because you can't expect them to go with you. It seems immoral for any law or tax guideline to expect you to sever roots with your parents. If my parents lived anywhere in the world, I would never sever ties with them - regardless of where they or I live. I would still go visit them every christmas. This surely is no indication of residency in their country. If an individual can't bear to live in the UK (it does happen, I can give examples), how can the government encourage cutting ties with an individual's parents? This seems wholly immoral. I appreciate they're trying to cut down on tax evasion but what if someone genuinely doesn't want to friggin be here, their guidelines will catch out regular genuine people as well, or worse, force them to stop communicating with parents.

Pistolpete2

I don't think it is a matter of breaching the tax law.

I'm not saying that HMRC make it up as they go along but the law is to a large extent based upon case law so when HMRC looked at this particular case they redefined what it takes to leave the UK and residency for future cases, based upon updated case law.

I'm sure the same sort of rules can be applied to define residency the other way around where folks are arriving in the Uk and want to get benefits and the use of the NHS. IF they do not really intend to stay as permanent residents by putting down proper roots they should not be and are not entitled.

Bluegrass Lass

So would this apply to Expats that take jobs outside the UK, but do not sell their homes? I know there are many folks in the US that have kept their UK homes and are simply renting them out. Would that potentially make them 'resident', especially if they still have family in the UK?

Pistolpete2

Only if they keep family ties with their family in the UK. Spend time with them, regularly visit the UK and act as though they do in fact still live in the UK from the social side of things.

nun

My take would be if you keep a home and rent it out rather than having immediate family living in it and don't visit for extended periods each year you would have broken you ties. You'd have to pay tax on the rent in the UK, but non UK income should be outside HMRC tax net.

Keeping a home in the UK where your immediate family live, sending your children to UK schools and visiting for 91 days a year sounds like you are not complying with the spirit of the law. If you want to become non-resident then sell the house and move with your immediate family.

When I leave Massachusetts I'll sell the house, and break all ties so I can prove non-residence.

nun

I think by family they mean spouse and children. Domicile and residency often depends on intentions.