Expats should keep records of return trips to the UK

 

Expats no longer living in the UK are being warned to keep meticulous records when it comes to visiting friends and family back home.

This is because the Finance Act 2013 has changed the rules surrounding non-residency and the payment of tax.

As of April 1st this year, the Statutory Residency Test has come into play, which determines whether expats are eligible to pay UK income, capital gains and inheritance taxes.

There has been an increase in the number of challenges to non-residency by HM Revenue & Customs (HRMC) in recent months and good record keeping can be the key, reports the Financial Times.

The new rules can be confusing, but it is important that all expats ensure they understand them fully so they do not fall foul of the system.

An automatic test assesses the number of days spent in the UK, amount of time working and if there is a home available to live in, as well as other connections, such as friends and family.

If a challenge is made based on this information, it is important that the expats in question have documented times and dates carefully on each occasion they have returned to Britain.

Such diligence can be the difference between a large tax bill and being able to prove that there is no claim by the HMRC to funds.

Anyone who retains property in the UK, which they live in when they visit, should be particularly careful, as this can be a strong argument against non-residency.

The benchmark for deciding on residency is 183 days and a day is counted by the HMRC if you are there at midnight.

Some people believe that as long as they are in the UK for fewer days than this they will be exempt, but this is where other factors can come into play.

Having dates and times well documented is particularly vital if an expat is nearing the 183-day cut-off as the HMRC may call this into question and evidence may need to be provided.