Pictured: Jeff Millington
Thousands of tax exiles remain in line for huge bills from the
taxman following a landmark court ruling today.
Jeff Millington , Director of Tax Investigations at the
Birmingham office of BTG Tax, said they needed to be ultra cautious
about such matters as social and family ties.
In an important test case, the Supreme Court upheld by four to
one the Court of Appeal's decision in favour of HM Revenue &
Customs in refusing Robert Gaines-Cooper non-resident status - he
is said to have been presented with a reportedly £30 million
retrospective tax bill.
HMRC has all along argued that Mr Gaines-Cooper was a resident
of the UK despite spending most of his time in the Seychelles. The
dispute centred around IR20, which was the authority's guidance on
what constitutes residency for tax purposes.
He is now taking legal advice on whether to go to the European
Court of Human Rights.
Mr Millington said: "There are many pitfalls lying in wait for
the unwary - from family ties, children remaining in UK schools,
membership of UK clubs such as golf and gym clubs to the accounts
where your money is kept.
"I suspect there are an awful lot of people in the same
situation as Mr Gaines-Cooper."
The globe-trotting businessman insisted he had been domiciled in
the Seychelles for more than 30 years and had religiously kept to
the taxman's published requirements by spending no more than 91
days per year in the UK.
But, it was ruled, England had remained "the centre of gravity
of his life and interests".
Mr Gaines-Cooper had never cut his ties with Berkshire, where he
grew up, and Oxfordshire, where his home, near Henley, continued to
be his main residence. He had failed to show "a distinct break"
from his social and family ties in the UK.
The entrepreneur, in his 70s, began a successful juke box
business venture in England in 1958, and subsequently established
companies across the world. His Will had been drawn up under
English law and his son had gone to an English school.
"This is where such ties can get complicated and it is important
that detailed records are kept of each and every visit," said Mr
Millington. "If you have never really left the UK then in the light
of this case, the tax man may come looking for you."
"Simply saying that you live and work overseas will not put off
the tax authorities.
"Individuals can have very complicated personal arrangements and
ties to the UK, it is imperative that accurate records of visits to
the UK are maintained."
It is hoped that with the new Statutory Residence Test likely to
be introduced from April 2012, that individuals will be able to get
the clarity required in this most complex of areas.
This though will not apply to any residency challenges that
concern periods prior to next April and it could be that many
people, find themselves like Mr Gaines-Cooper, never having
actually left the UK.
For more information about BTG Tax, please visit their website
here: www.btg-tax.com