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Tax exiles should check their residency status

Tax exiles should check their residency status

Accountants might be interested to learn that the long-running saga concerning the tax residency status of Robert Gaines-Cooper finally reached its conclusion in the Supreme Court last week.

This residency dispute has been going on for many years. Gaines-Cooper claimed that as he spent the majority of his time living in the Seychelles, he was not a UK resident. However, HMRC disagreed on the grounds that he still had strong links with the UK and therefore he was resident.

Last Wednesday, the Lord Justices ruled in favour of the Revenue and now concerns are being raised that HMRC will start to pursue thousands of Brits who have left the UK for tax purposes.

Jason Collins, a partner at law form McGrigors, said the floodgates have been opened and tax exiles would be well advised to obtain urgent advice on their status from a reputable firm of online accountants.

He went on to explain that Gaines-Cooper had determined his residency status by following the guidance in HMRC document IR20. This document should have provided certainty over the Revenue’s rules for determining whether or not a taxpayer should be treated as a UK resident, and yet this case proves that that certainty does not exist.

Although the Lord Justices did criticise HMRC over the lack of clarity in the IR20 guidelines, they did point out that taxpayers could contact a Revenue office for advice if they had difficulty interpreting the regulations.

The government is hoping to introduce a statutory residence test that will be both simple and transparent and Collins said its introduction is now more important than ever.

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Image: Palm Trees by ajcreencia

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