THE taxman has scored a major victory in clamping down on individuals trying to leave the UK to avoid the 50% tax rate.
In a Supreme
Court judgement, a wealthy individual who left the UK in the 1970s was deemed to be still tax-resident here – despite meeting the conditions for non-residency set out in general HM Revenue & Customs guidance.
David Butterworth (pictured), of Huddersfield chartered accountancy firm Wheawill & Sudworth, said that this was another instance of needing to look at the substance of the arrangements rather than just their legal form.
He said: “Although the technical conditions were met, in the round it was decided that the person had not left the UK either permanently or indefinitely by making a distinct break with it.
“Deciding factors included retaining a house in the UK, sending children to private school here and making such habitual trips to the UK each year that they became more than just visits.”
Mr Butterworth said: “This decision will make it much more difficult for big-earners to leave the UK to avoid high taxes whilst still retaining direct links here. It seems that new legislation will be introduced to both tighten the rules and make the overall position clearer to understand.”