x Abu Dhabi, UAESaturday 22 July 2017

Ruling could affect tax for British expats

Financial advisers warn that the UK government could take a bite out of the net worth of many other expats, too.

Conventional wisdom is that Britons leave their tax obligations behind when they move abroad, but a recent Court of Appeal ruling suggests that UK authorities are not that inclined to let citizens and their money go. The court held that Robert Gaines-Cooper, a businessman living in Seychelles, remains liable to UK tax because he has not made a clean break from his life in Britain. Despite living abroad for more than 30 years, married a woman from Seychelles and visits Britain for less than 90 days a year.

The decision could cost Mr Gaines-Cooper as much as £30 million (Dh170m). Financial advisers warn that it could take a bite out of the net worth of many other expats, too. "Over one million people have left the UK to live abroad in the past six years," Julia Whittle, a principal of Punter Southall Financial Management in London, said in a note summarising the case. "Many of these and many of the estimated several million more who have left the UK over the past 20 years do not realise that they could still be liable to UK tax."

The chances that they are liable increase with the tangible ties that they have left behind. The court ruling "could have serious consequences for many British expats who simply have children at school in the UK, retain a property or [other] asset or have significant connections here," Ms Whittle said. She added a warning: "If ... you are still considered resident in the UK for tax purposes, all your worldwide assets will be included in assessing your liability to tax since you believed you left the UK."

But that "if" still may be a big one. Peter McGahan, the managing director of Worldwide Financial Planning in Cornwall, said that the ruling is "outrageous," and he suspects it will be overturned on review. "I have a feeling that it's going to get defeated," he said. "If he was applying all of the other rules" governing residency, "I don't see how the fact that he retained property in the UK" could be enough to deem him resident.

Mr Gaines-Cooper owns an estate in Henley, west of London. Even if the ruling stands up, Mr McGahan sees an encouraging sign for expats in Mr Gaines-Cooper's misfortune, or really in his fortune. "Clawing back £30 million is worth it" to revenue authorities, he said, "but they're not going go after someone going off to Abu Dhabi to make £60,000-£70,000 a year."