The failure of the appeal of Robert Gaines-Cooper in his case against the British taxman, as he fought to prove he was non-resident in the UK and therefore not liable to UK income tax on his many millions, has made headlines – and created some confusion.
A lead article in the Money section of this week’s Sunday Times for example would have us all believe that HMRC has got it in for all expats, and that we’re headed the same way as America where Americans are basically ‘owned’ by the IRS even if they emigrate to live on the moon!
It’s a case of here we go again, apparently and allegedly the British government is going to launch a tax crackdown on expats who’re resident abroad and claiming non-residency and not-ordinary resident status in the UK to ‘legitimately avoid’ tax. But in all honesty, nothing has changed…here we explain the rules and why the Robert Gaines-Cooper case allegedly and apparently flauted them.
Apparently Robert Gaines-Cooper has a house in the UK – his wife lives/did live in it. He’s a member of a golf club in the UK and has an art collection at his British house. His son went to school in Britain. He regularly but infrequently ‘visits’ Britain…and yet he claims to be non-resident in the UK for tax purposes. Robert Gaines-Cooper is a wealthy man, he’s successful and therefore he is high profile, high net worth and highly worth pursuing by HMRC who were pretty convinced that he was cleverly flauting the rules of residency in the UK to avoid paying British tax on his worldwide income and gains.
HMRC went after him because he was worth going after. He was worth it on a purely financial level, he was worth it because he was clearly British and tied to the UK but living abroad for just the right amount of time to seemingly abide by the rules of non-residency to avoid tax. He was worth it because his case has proved a very strong point. The point is, there are rules that can legitimately and easily remove you from the British tax system, but if you take the …. Michael …. and flaut the system for your own gains, HMRC is very powerful and you will not win!
If you’re an ‘average Joe’ retiree living abroad anywhere from Argentina to Zambia and you’re claiming non-residency status but occasionally visiting the UK you probably have nothing to worry about. At the same time, if you’re living abroad for work purposes but you have family back in the UK you sometimes see, you’re probably not affected. If you’ve genuinely made another nation your home – but you’re still firmly British to your core, you’re probably not affected! If you take the proverbial and flaut the government’s own rules in their face and you’re worth a bob or two – you’re probably going to get taken to the cleaners by HMRC.
If you leave the UK the government doesn’t care. If you abide by the rules relating to residency and ordinary resident status as clearly detailed on HMRC’s own website and you have no ulterior motives, the government won’t be interested in you. If you break the rules, you flaut the rules, you just about skirt or skim the rules and you’re trying to avoid your tax liability, expect to be caught and punished.
In other words, despite the Robert Gaines-Cooper case – nothing has changed in terms of the rules relating to residency status or liability for tax in the UK. It’s just the case that journalists have seen a way to create a few sensationalist headlines – well, sorry, but we’re into bubble bursting today, and where there’s rubbish being printed, we’re not going to stay quiet about it.
You can leave the UK and leave your British tax liability behind – either entirely or in part. You can, as an expat, enjoy potential tax saving benefits of being a non-resident, investing offshore and earning an income abroad. You just need to understand the rules and not break them – it really is that simple.
