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Paying tax in the UK prior to becoming a US resident

Paying tax in the UK prior to becoming a US resident

Old Mar 24th 2011, 9:38 am
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Default Paying tax in the UK prior to becoming a US resident

Has anyone sold a holiday home/investment property BEFORE becoming a US resident and not declared it on their UK tax return?

I have a choice to sell what was once (I have never lived in it permanently) a family holiday home, which I received as settlement in my divorce last year. I am considering putting it on the market and selling before moving over to avoid paying US tax on it.

I am intending to buy a house in Florida with my wife (US citizen) and as I am never going to return to the UK, we are both wondering why the hell we should worry about declaring it here? The UK taxman may never take issue with it and if he does, I am no longer living here so why should I worry about it?

Someone else must have been down the same road before us.....? Love to hear from you if you have.
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Old Mar 24th 2011, 12:37 pm
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Default Re: Paying tax in the UK prior to becoming a US resident

I am in a somewhat similar situation. Is it not possible to declare it as your principal residence to avoid CGT? My accountant has advised me that there is nothing that HMRC can do to collect debts if you're living outside the EU.

I believe that they also have to write off tax that hasn't been collected after several years too. That last sentence you might want to double check, it was a while ago I looked into this.

I'm all for screwing the system, I cannot stand the UK government and banking system after all. But I'd avoid doing anything that constitutes tax evasion as that constitutes a criminal offence. You never know if you'll have to return to the UK (for example a funeral) and you'll probably be arrested on entry.

That said, if you REALLY have no reason to come back and HMRC have no idea where you're living, f*** 'em!

I am looking forward to hearing contrasting opinions on this matter.

Disclaimer: I'm not a lawyer, none of the above is professional advice!!
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Old Mar 24th 2011, 12:50 pm
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Default Re: Paying tax in the UK prior to becoming a US resident

We would prefer to not have any problems hanging over our heads but this is the only home I own (no I cannot put it down as my main residence sadly).

I did wonder if the US and UK tax men collaborated at all, but your Accounts knowledge suggests otherwise.

I am very much of the mind to just sell it (my capital gain is quite large - around 250,000) and walk away - I dont intend to leave Florida to come back - why the hell would I? + house prices here are just too damn high.

I do know of someone who had to leave the UK because he owed the tax man money (much more that this though) and they came after him, but could do nothing as he was living in Canada, he also returned to the UK twice in that time without getting arrested.

What we both need is the view of someone who has done this already!
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Old Mar 24th 2011, 1:19 pm
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Default Re: Paying tax in the UK prior to becoming a US resident

I don't think the UK and US collaborate at all from what I've researched. Each country has no jurisdiction in the other and I certainly know that civil debts are not enforceable in these territories. I am just worried about them arresting me at the airport as I do have family in the UK and will have to return.

I am looking to skip town on a much smaller tax debt than yours so the story about your acquaintance gives me some hope. Somewhat related, I'm also in the process of settling my US wife's civil debts (medical debts, credit cards etc); the process is going quite smoothly as I know they have no way of collecting while she's here and the debts are years old.

I don't wish to hijack your thread here, but if anyone has any experience of the California Franchise Tax system I'd really be interested in hearing from them. My wife, bless her, ran away from 3 speeding tickets and now the bill is about $1.3k which I'm going to have to pay! Is there any way of negotiating this down once its gone for wage garnishment? I need to clear this as she'll most likely by now have arrest warrants out for her and she needs to renew her driving license!!

Six weeks until the move and so much to do

PS: Florida eh? My wife says the humidity there is a killer. We're going to Northern CA, cannot wait!
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