Expats with HMRC problems may benefit from recent court judgment

British expats with former UK businesses who are worried about their HMRC tax status may gain immunity by means of a recent court judgement.

Emigrating overseas is a stressful enough experience, but attempting to close down your business at the same time can easily result in a few mistakes. Life being what it is, they’ll focus on tax and VAT issues more often than not, especially if dealing with the accounts has been something of a do-it-yourself venture. More than a few expats will have spent their first few years overseas expecting a challenging letter from the British taxman just in case they’ve got something wrong.

However, the result of a recent high court case brought by HRMC would suggest those who’ve simply made accounting mistakes as well as those who’ve simply disappeared might not now have anything to worry about. It’s a huge embarrassment for the UK taxman, as the court ruled the tax authority’s actual authority stops at the white cliffs of Dover. The case was brought against a former co-owner of a football club who’s lived abroad for 13 years, and was instigated by HRMC in 2012 after an investigation showed anomalies during the period the plaintiff was living overseas.

The investigation gave cause for HMRC to demand full information on tax-related affairs between 2004 and 2013 from Tony Jiminez, formerly a part-owner of Charlton Athletic football club. He refused, and the demand ended up in the UK High Court. Being a wealthy man, Jiminez had no problem employing legal experts on tax matters, who successfully argued their client was living abroad and covered by a foreign tax regime, so should not have to comply with HMRC’s demands. The judge agreed, and Jiminez was immediately taken off the taxman’s hook.

The twist in the tail of this story is that, once a precedent is made in court, it can be quoted in other similar cases to great effect. The judgement means the power of HMRC in actions against expats who, they believe, owe back taxes actually stops at Britain’s borders. HMRC told reporters it was ‘disappointed’ at the judgement and might well appeal, but for now the judgement has to be accepted. However, anyone planning to close their business and retire or start a new one overseas is strongly recommended to do so via a professional accountant used to dealing with would-be expats. In law, as in life, there are shocks as well as surprises, and it’s best to make certain you’re on the right side of the law, especially if it’s tax law.