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British couple face non-resident £600k tax bill after move

Case proves the importance of severing UK connections when leaving the country

18 December 2013

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A couple from Cheshire who left their home for a life in Portugal in 2001 are now facing a hefty bill from HMRC, which shows the lengths that the tax agency will go to, according to Ronnie Ludwig, partner in the private wealth group of accountancy firm Saffery Champness.

Stephen and Pauline Rumbelow moved overseas via an unfurnished property in Belgium and considered themselves as non-UK resident because they only returned to Britain for visits of no more than 90 days a year, which was then the allowed limit.

They did not sell Winnington Hall, which they had run as a restaurant and conference centre, but it was ruled to be a family home.

Ludwig said: "This was a long-running case, going back to tax years 2001-2005, and Mr and Mrs Rumbelow have been hit with a tax bill of almost £600,000 including interest on tax unpaid.

"To simplify cases such as this, HMRC in April 2013 (amended in August) launched a new statutory residence test that will help taxpayers leaving the UK to determine whether or not they remain resident in the UK for tax purposes, coupled with a 106-page guidance document.

"Essentially residence is deemed automatic where a person spends at least 183 days in the UK, or where their home or homes are in the UK, or where they work for 276 days in the UK during the tax year."

He added: "Non-residency, whilst a seemingly attractive option in certain circumstances, may demand greater severance than an individual thinks or than they are prepared to make. Under these new, tougher rules it is even more essential that proper advice is sought where such a course of action is being considered.

"It remains to be seen what tax residency tests would be applied in Scotland should the country become independent following the referendum next September."

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Tax & Wealth structuring