There’s No Place Like 127-0-0-1 (±x)
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20170526 UPDATE – SORRY I JUST CHECKED THE FINANCE ACT 2017 MYSELF AND THE NON-DOMICILE PART HAS BEEN REMOVED.[This is what happens when I use other people’s stuff without reading the actual legislation myself. So parts of my article are not relevant now but may well be in 2018, so planning is an option for many expats. However the paragraph entitled ‘No Involvement with UK Structures or Income Tax’ is still my position in the present and ongoing.
I am sure the HMRC Expatriate team in Manchester will be particularly disappointed by my news – ha ha!
Also LinkedIn does not allow 127 dot 0 dot 0 dot 1 in an article, just in case people were wondering 🙂
The area pictured in the photo above is Millstone Edge, Hathersage where I went on various orienteering exercises when I was a Warrant Officer in the Mount St Mary’s College Combined Cadet Force in the late 1980s.
Unfortunately my strategies to move to the UK and shifting significant assets there has now been put on ice indefinitely…
Finance Act 2017
On 27 April 2017 the Finance Act 2017 received Royal Assent:-
Notwithstanding that this is a massively cut down version of the original Finance Bill 2017, by around 600 pages:-
certain items which remain are diametrically opposed to my plans for being Tax Resident in the UK again and/or transferring significant assets and/or their control to the UK.
I was born in Sri Lanka in 1972, and emigrated to the UK in 1973. I became a UK Citizen in 1985. At the time dual-nationality was not available so I dispensed with the LK citizenship.
My plan was always to return to Sri Lanka and retire there, and to be buried in the same burial plot as either my grandfather Chevalier J E M De Saram OBE or my great grandfather Professor W A E Karunaratne.
My connections to Sri Lanka were always quite strong in terms of extended family as well, and considering the entirety of information my domicile never changed from Sri Lanka.
I regained my Sri Lankan citizenship in 2001 and I am a dual-national, having resided here since June 2013 after suffering a heart attack in Singapore on 18 May 2013.
Even my normal UK tax resident status was not affected by my LK domicile status. I knew from advice provided by Pricewaterhouse Coopers and others) in the late 1990s that there were significant advantages in relation to income tax and/or capital gains tax by being non-domiciled for UK taxation purposes.
An article published on 25 March 2017 in the UK Financial Times entitled ‘Non-dom’ tax change to hit thousands of returning expats’ provides a straightforward account of the issues:-
Key paragraphs are:-
“Thousands of British expats face significant bills if they return to the UK after new “non-dom” tax rules come into force in April.
The finance bill published this week will pare back the tax perks offered to people whose permanent home or “domicile” is outside the UK, imposing new limits on their ability to keep offshore income out of Britain’s tax net.
Permanent non-dom status will be abolished for anyone living in Britain for at least 15 of the past 20 years. Non-dom status for Britons who return to the UK but claim to have a permanent home abroad will also be removed.
The changes have caused consternation in Hong Kong and Singapore, where large numbers of Britons work in finance and legal services.”
“Expats affected by the change were born in the UK, started life with a British “domicile of origin”, but went overseas and put down roots, keeping their wealth outside the scope of the UK tax net even if they subsequently returned to the UK.
If they now return to the UK, they will be taxed on income and gains from any offshore trusts or companies they owned. They will also fall into the UK inheritance tax net, subject to a 12-month grace period.”
Institute of Chartered Accountants of England and Wales
Finance Bill 2017 changes to the taxation of non UK domiciliaries
The change to the taxation of non UK domiciliaries (non doms) is a very complex area of legislation and as so much is still uncertain it is impossible for those individuals who became deemed domiciled in the UK from 6 April 2017 to plan and structure their affairs with any certainty. We have prepared a briefing to highlight the main problems with the draft legislation published as ICAEW Rep 50/17....
As many people know from my articles and generally, my unusual work:-
requires complex offshore structures. As my income (before I had the heart issues) was being directly settled into various special purpose vehicles and/or irrevocable trusts:-
Mareva Injunctions and Residential Property Structures
Thankfully the asset protection mechanisms that protect the significant assets are bullet-proof – trusts are irrevocable and my name appears nowhere, neither as associated with the trustee, a foundation member, a protector, nor even a beneficiary.
However other structures in which I am named as a beneficary could be an issue if I were tax resident in the UK.
Commercial Entities Owned and/or Controlled
This area is the largest problem if I were in the UK because I would not want the income of the entities to be assessed on me!
Many of the entities have massive taxable losses which could be utilised as we keep the different asset classes compartmentalised for obvious reasons.
As an example, entities in high taxation jurisdictions are used as the primary cost centres, whereas the revenue centres are all offshore, in zero or low tax jurisdictions and bulletproof.
The bottom line is that I would hate anything that gets in the way of longstanding tax strategies. The benefits of moving assets to the UK to truly maximise asset utilisation and me residing there would be completely eroded by the new Finance Act 2017.
No Involvement with UK Structures or Income Tax
With immediate effect I would confirm the following:-
(a) I will not be appointed as a Director and/or shareholder et cetera of any of the UK entities on 12 June 2017, as was the original plan. I will therefore remain unconnected to all entities and their activities.
(b) Ownership and/or control of overseas entities, either by me or a third party will not be transferred to the UK;
(c) Regularisation can still proceed via UK Chartered Accountants but that would be for audit, investigation and compliance purposes, rather than tax planning.
(d) I am definitely suing parties in the UK without question, and should security for costs be required then I would be more than happy to pay the security, rather than via existing UK asset utilisation, resulting from their transfer.
Whilst the Regulation of Investigatory Powers Act 2000 was shocking:-
And the whole Brexit issue has been an abortion from the start:-
and the lack of a proper strategy and/or direction only means more crime:-
Overstretched police have enough problems with escalating terrorism:-
UK terror threat raised to critical: here's what it means
and given that I have worked on projects involving Weaponised Software:-
and look like a terrorist (the public’s stereotype) when I have not shaved, it is the Finance Act 2017 which means I will pass on the whole ‘UK thing’ for now. In fact Syria might be safer 🙂
Joseph S R de Saram (JSRDS)