UK tax exiles under threat

Thousands of UK tax exiles may face large tax demands after an entrepreneur lost a bid to overturn a decision by the taxman to hit him with a £30m bill.

Millionaire Robert Gaines-Cooper lost an appeal against a ruling by HM Revenue & Customs (HMRC) that he was liable to pay UK tax despite his claim that he had lived in the Seychelles for more than three decades and not coming back for more than 90 days a year.

Appeal Court judges said he had never been exempt from UK taxes as a non-resident citizen. Although he had heeded rules to spend fewer than 91 days here, he had still not cut his ties with the UK because Britain remained “the centre of gravity of his life and interests”, they said.

Experts said Gaines-Cooper, who has been involved in a founding or running a number of health-related companies, may now have to pay a tax bill of £30m, for the years from 1993 to 2004.

However, Appeal Court judges said any would-be tax exile, such as Gaines-Cooper, would always also first have had to show they had really left the country.

Any ongoing links would mean the person had not actually cut their connections with the UK and would thus have to pay UK taxes, they said.

Gaines-Cooper is understood to be planning to appeal to the Supreme Court over the case.

HMRC said it would study the 31-page judgement, but highlighted the Court of Appeal’s acknowledgement that HMRC was able to take action to ensure it catches those who may have previously not paid tax that was due.

Tax experts welcomed the ruling for clarifying the tax treatment of employees who work or were seconded abroad.