Expat
Village is edited and published by Iain Williams in Caracas, Venezuela.
An article by Ian Cowie, Daily
Telegraph Personal Finance Editor at www.telegraph.co.uk
Millionaires based overseas who frequently visit Britain could face tax bills going back up to 13 years, as a result of a new court ruling.
But the change in how residence and domicile status will be determined for tax purposes means many wealthy foreigners who live and work in this country are now less likely to be forced to pay tax here.
The biggest losers from the ruling are business people who enter the UK from tax havens such as Monaco on Monday and leave on Wednesday, allowing them to retain 'non-resident' status and avoid paying income tax.
Since 1993, days of entry and departure have been disregarded when calculating whether an individual has spent an average of more than 90 days in the UK during four consecutive tax years – or more than 183 days during any single year. Anyone who exceeds either limit is liable to income tax.
Now that the rule has been changed by the Special Commissioners, many wealthy business people will be stripped of their non-resident status.
The tax judges ruled against multi-millionaire Robert Gaines-Cooper, who sought to establish he was resident and domiciled in the Seychelles. He faces tax bills going back to 1993.
It is understood that Mr Gaines-Cooper, whose businesses have ranged from a jukebox company in Henley-on-Thames to a medical equipment supplier incorporated in the Netherlands Antilles, intends to appeal the decision. He was represented before the Special Commissioners by leading tax barrister Michael Flesch QC.
Mike Warburton, of accountants Grant Thornton, said: "This ruling will affect many so-called 'Monaco millionaires' who fly into London every Monday morning and then go home every Wednesday evening.
"Before the Special Commissioners' decision, that only counted as one day's residence in the UK. So they could work 50 three-day weeks a year and only be regarded as having spent 50 days here.
"Now the number of nights spent here will be counted, so they will be deemed to have spent 100 days in the UK and, as a result, lose their non-resident status."
Mr Warburton said: "Mr Gaines-Cooper sought to establish that he was domiciled in the Seychelles but that was rejected because, among other factors considered in the Special Commissioners' judgment, he liked to go to Ascot and was a member of the Rolls-Royce Owners' Club.
"It is ironic to note that both his parents were tax inspectors. But the Revenue may have shot themselves in the foot in obtaining this ruling because many wealthy foreigners will now find it easier to retain non-domiciled status, despite spending long periods in the UK, meaning they are not liable to pay tax here."
Expat
Village is edited and published by Iain Williams in Caracas, Venezuela.
