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HMRC rulings could 'ruin financial services sector'

Published on 22 Feb 2010 under category: legal

Two rulings last week by HM Revenue & Customs have been attacked by the financial services sector, for setting a precedent in the handling of residence and domicile rules for tax exiles.

Robert Gaines-Cooper, a British entrepreneur living in the Seychelles, lost his residency battle and tax status with HMRC after they argued that his life was centred in the UK, making him liable for UK taxes, though he had spent less than 91 days in the country.

He will now have to pay back £30 million to Revenue & Customs.

HMRC also passed a similar ruling on Andrew Tuczka, who had lived here for two and a half years and therefore qualified under the domicile rules which state that taxes only have to be paid by foreign residents after the third anniversary after their arrival.

HMRC rejected his claim that he was "not ordinarily resident".

It is expected the ruling will enable HMRC to chase up several cases of high-earners flouting taxes in the UK.

However, lawyers and those working in the financial services sector believe the ruling could effectively punish people who had followed HMRC's legislation prior to changes in 2009 – with some high-earners paying up to six years worth of taxes.

If you require advice on Insolvency and Bankruptcy please call us on +44 (0)20 7831 0101 and ask for Katherine Sillett.