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I’m a (taxpaying) celebrity – get me out of here?

High-profile figures looking to avoid paying tax in the UK by becoming ‘tax exiles’ still hit the headlines, but surely this is supposed to be a thing of the past since the introduction of the Statutory Residence Test earlier this year?

Far from simplifying the rules for residence, they remain complex with many anomalies. HMRC recently published much needed guidance on the rules, seeking to provide ever more assurances for those unclear of their tax status. But perhaps greater clarity also allows would-be exiles to plan their affairs with more certainty?

HMRC’s updated guidance includes new examples, including those spending time in multiple countries and passengers passing though the UK in transit. Some less common situations have also been addressed, including giving consideration to those spending time in jurisdictions which are split into multiple territories, provinces or cantons.

The increased clarity also provides opportunities for those wanting to avoid tax.

Previously, anyone spending 183 days or more in the UK was bound to be resident. A previous, unreliable, concession has become law so that in some extreme cases, up to 242 days could be spent in the UK without falling within the tax net.

However for many, the non-statutory ‘90 day’ test was key to avoiding UK tax residence whereby, provided their time in the UK didn’t exceed 90 days a year on average, they’d be reasonably certain that they weren’t a UK resident.

Now, by ensuring that certain UK ties are minimised, it’s possible to spend up to 120 days per year in the UK whilst legitimately retaining a tax residence outside the UK.

Despite apparent relaxations, the issue of UK tax residence remains complex and achieving a tax exile status while frequently visiting the UK remains difficult.

In particular, those leaving the UK part way through a year will find it may take longer for the UK tax authorities to let go, and those entering the UK could find the taxman interested much sooner than expected. The guidance suggests that those coming into or leaving the UK have greater prominence on HMRC’s radar.

While some home-grown celebrities living in luxury overseas may now be safe in the knowledge that they are not in breach of any tax laws, anyone planning to be a ‘tax exile’ will need to consider every angle before being satisfied that they are truly out of the system.

This was posted in Bdaily's Members' News section by Baker Tilly .