More large earners to relocate over residency uncertainties?

18/02/2010

The UK's tax authorities have launched a "sustained attack” on individuals who use residence and domicile rules to relocate abroad and reduce their tax bills, it's claimed.

In a move warned as potentially "devastating" for the country's financial sector, over 100,000 high earners are being pursued by Her Majesty's Revenue and Customs (HMRC).

The revelation follows this week's news that Seychelles-based British entrepreneur Robert Gaines-Cooper had lost a long-running court battle over his residency. The Court of Appeal ruled that he is liable to pay British tax even though he spends less than 91 days in the country.

According to the Times, Austrian corporate financier Andreas Tuczka is the latest to lose a tax dispute in a blow to over 30,000 Britons who work primarily abroad.

In light of the developments, lawyers and accountants are reiterating their belief that rising numbers of professionals will be deterred from working in Britain and employers forced to look overseas for more favourable tax systems.

Frank Nash, private client partner at Blick Rothenberg, affirms that uncertainties over residency will push large earners to relocate: "With the new 50 per cent tax rate and national insurance going up, the majority of their efforts are going to the State."

"Effort and endeavour has effectively been nationalised," he adds.