The CIOT, a member group representing many contractor accountants, is calling on the new government to alter the way it makes the country’s tax laws. They believe that we should be following the US model which allows for more scrutiny over tax regulations.

The CIOT also says that the formation of a Joint Committee on Taxation could bring benefits to the UK. There is already a similar system operating in the US.

The organisation’s president, Vincent Oratore, said that there are deep flaws in the way the UK makes tax laws. He highlighted the lack of expert scrutiny and insufficient parliamentary time as the primary causes.

These flaws have led to a system whereby some taxpayers, such as limited company contractors, face unintended losses whilst others get the opportunity to practice tax avoidance, simply because the laws are badly constructed.

He went on to say that the UK can learn something from the US taxation model. Their Joint Committee ensures that both Houses of Congress can play a constructive, meaningful role in the creation of tax legislation.

In a bid to assist the HMRC in their work, and improve the standard of training provided for tax advisers in HMRC’s offices in Whitehall, the CIOT opened a new branch last month.

The Revenue employs 106 chartered tax advisers and before this new branch opened, some of their training requirements were not being met.

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The impending 50% tax rate is likely to prompt some high-earners to leave the UK and take up residency in a country with better tax laws. But will that let them off the hook with HMRC?

Last week’s High Court ruling in the Robert Gaines-Cooper case seems to suggest that it’s not necessarily as simple as some people would like to believe.

Mr. Gaines-Cooper is a 72 year old tycoon who moved to the Seychelles in 1976. He adhered to Britain’s residency rules but the court decided that the “centre of gravity of his life and interests” was still England. He has a house in Henley-on-Thames, for example, where his second wife lives. Lord Justice Moses declared that this meant he had not cut pre-existing ties with Britain. The ruling means that Gaines-Cooper is now facing a tax bill of £30m dating back to 1993.

Non-residents only need to pay tax on income earned in Britain which can lead to significant savings. They are also only allowed to stay in the UK for a maximum of 90 days in any one tax year.

This case brings into question how much of a break is necessary in order to be classed as a non-resident. City law firm Withers advises its clients “to leave and sever as many links as possible”.

The Sunday Times clarified this further by saying that after you sell up you should not return to Britain within the first year. The opinion of many contractor accountants is clear – to avoid UK income tax you need to live abroad for 3 years, and to avoid capital gains tax, 5 years. Any directorships should be resigned, all bank accounts closed and mobile phone contracts should be terminated. Family members such as a spouse or children should not remain in the UK and the electoral register should be updated with your overseas details.

We know that HMRC is trying to recoup as much tax as it can in a bid to cut the public expenditure deficit. The taxman raked in £373 million in 2008-09, an increase of 360% on the year 2004-05 from their investigations into wealthy taxpayers. And there are likely to be more similar cases to come.

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