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Change residency status

Can residency status be backdated and how to tell HMRC

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Hi all,

 

Apologies but this is a bit of a tricky one (for me anyway).

 

I have a client who lives abroad. I am happy that he has been a non-UK resident for around 20 years. The problem is that he never actually advised HMRC and is now concerned about any potential HMRC liabilities. There is UK income that would be taxable for a UK resident, but is disregarded as a non-UK resident, so the residency is fairly important. This client has also not been subject to any self-assessment.

 

My question is, can the non-residency status be requested retrospectively? If so, how is this done? I can only seem to find ways to notify HMRC if you leave in the current year. Also, as an agent am I able to act for this on his behalf with HMRC as I am not sure it would fall under the remit of individual tax affairs on the 64-8.

 

On my client's gateway account it is still showing an old UK address from years ago, would simply changing this to his overseas address have any impact on his residency status with HMRC?

 

Sorry for the long post, but appreciate all the help as this is a new one on me!

 

Thanks,

Replies (16)

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By bernard michael
21st Oct 2021 09:49

Do you complete an SAR - it's not shown in your posting. If you do what address is put on it??

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Replying to bernard michael:
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By Mikey-Mikey-Mikey
21st Oct 2021 10:26

Hi, sorry when i said

"This client has also not been subject to any self-assessment"

I should have been a bit more concise - not subject to any self-assessment returns

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By Tax Dragon
21st Oct 2021 09:54

So a fella who hasn't lived in the UK for 20+ years is suddenly worried about UK tax and has appointed a UK accountant? Something has happened to make said fella suddenly worried. Worried enough to appoint an accountant*. Any idea what that something is?

*A whole community of accountants, no less.

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Replying to Tax Dragon:
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By Mikey-Mikey-Mikey
21st Oct 2021 10:31

In all honesty, I have done my due diligence etc and I am struggling to see that there will be any liability as a non-uk resident.

From what I can tell it is simply a case of not giving it a second thought when leaving and 20 years later it is a case of... oh bother [insert alternative expletive], I never did tell HMRC, where does that leave me...

Although I do understand the scepticism.

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By bernard michael
21st Oct 2021 10:42

From what is the UK income derived??

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By Catherine Newman
21st Oct 2021 10:42

What is the nature of the UK income? That is the crux of the problem. If you are struggling with the residency situation, are you sure that the income is excluded income?

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Replying to Catherine Newman:
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By Mikey-Mikey-Mikey
21st Oct 2021 10:49

The income is UK div's and as a non-resident it should be treated as disregarded.

But the problem effectiovely getting HMRC to acknowledge the non-UK status and how to actually go about doing it

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Replying to Mikey-Mikey-Mikey:
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By Catherine Newman
21st Oct 2021 10:56

That's encouraging. You don't need HMRC to acknowledge non-residency. The only problem you might face is if the client is using a c/o address in the UK. I have a few of them.

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Replying to Mikey-Mikey-Mikey:
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By Tax Dragon
21st Oct 2021 11:48

Mikey-Mikey-Mikey wrote:

The income is UK div's...

It might be the company that has the more interesting tax issues. Does client run it? Work for it?

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By SteveHa
21st Oct 2021 10:54

Residence is a matter of fact, not of election. Why do you think you need to do anything retrospective at all?

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Replying to SteveHa:
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By Tax Dragon
21st Oct 2021 11:10

Why does the client? (And what is client paying for?!)

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Replying to Tax Dragon:
By SteveHa
21st Oct 2021 12:01

Point taken. I was answering from the OP perspective. Doesn't change my response, mind.

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Replying to SteveHa:
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By Tax Dragon
21st Oct 2021 12:27

To answer my own question, client is buying peace of mind. But he has to be prepared to pay a fair fee for that. The difficulty with this sort of situation (which I'm sure we've all faced the likes of) can be that, if the conclusion is that no action is necessary (s811 isn't even a claim, AFAIK), there can still be a lot of work (and therefore cost) in establishing that conclusion - but not a lot to show client to justify the fee. And there may be myriad issues (eg I mentioned the company - OK that was an assumption - above) that you might have to consider in arriving at your 'no action' conclusion.

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Replying to SteveHa:
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By Mikey-Mikey-Mikey
21st Oct 2021 12:24

The client is erring on the side of caution and wants to to know they will not be stung with a bill due to not advising HMRC at the time of leaving the UK. Apart from that aspect, as I pointed out earlier in the thread, I am confident of them not having any liability.

To answer Tax Dragon - these are div's from an unconnected company. There is no issue on that side of things.

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Replying to Mikey-Mikey-Mikey:
By SteveHa
21st Oct 2021 13:16

I still stand by my response. What exactly do you think you need to correct?

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Replying to SteveHa:
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By Mikey-Mikey-Mikey
21st Oct 2021 14:19

Fair comment.

I think the easiest way to explain it is that my client wants to make sure that he is classed as non-resident. He is happy to update HMRC now and provide his overseas details etc to get everthing in order.

His main concern is that they will class him as uk-res only from the current time and try to say he had always been a UK resident prior to that as he never advised them. Therefore facing a historic tax liability.

Going by the comments (of all you wonderful and clever peers :-) ) it looks like there is not really an issue.

I have initially advised him that even if HMRC did want to go down this route he has all the visa/passport stamps etc to prove he was not in the UK and that maybe whilst not following the correct process of notifying HMRC he has in all essence been non-UK resident.

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