[fish13]

Hi,

My wife and I are moving to New Plymouth at the beginning of Feb and will not be returning (hopefully) for a couple of years at least.

I'll have a mortgage here, but will have it covered, just, by renting the property. That and the bank account remaining open to service this, is all my 'earnings' will be in the UK. I won't make any profit.

I know that I've to fill out a form and send it in to the tax man stating that I am leaving the country and therefore am not liable to UK tax.

2 questions :-

1.) I've heard horror stories about people being presented with a huge tax bill upon their return to the UK, after thinking they had covered everything and filled out all the right forms etc. Is this true and any idea how it happens / how to avoid it?

2.) Where do I get the form to send in stating that I am living overseas and not liable to UK tax? And are there any other forms I don't know about?

Bit worried as I don't want to leave here and come back in a couple of years to be presented with a bill for Gordon Brown's new jag!

Any help appreciated,

Cheers,

Hugo.

[Paul]

Hi,

My wife and I are moving to New Plymouth at the beginning of Feb and will not be returning (hopefully) for a couple of years at least.

I'll have a mortgage here, but will have it covered, just, by renting the property. That and the bank account remaining open to service this, is all my 'earnings' will be in the UK. I won't make any profit.

I know that I've to fill out a form and send it in to the tax man stating that I am leaving the country and therefore am not liable to UK tax.

2 questions :-

1.) I've heard horror stories about people being presented with a huge tax bill upon their return to the UK, after thinking they had covered everything and filled out all the right forms etc. Is this true and any idea how it happens / how to avoid it?

2.) Where do I get the form to send in stating that I am living overseas and not liable to UK tax? And are there any other forms I don't know about?

Bit worried as I don't want to leave here and come back in a couple of years to be presented with a bill for Gordon Brown's new jag!

Any help appreciated,

Cheers,

Hugo.

Hi Hugo

1. Probably people who have knowingly left behind tax liabilities when they left the country. Capital Gains Tax on sale of investments, properties etc could be one that catches some out. If you sold an investment property whilst you were non resident in the UK you would not be subject to Uk Capital Gains Tax but if you returned to live in the UK within the next 5 years (in broad terms) you would face a CGT bill then
Best advice is to to take proper professional advice on your own circumstances if you want to be sure

2. Form P85
Form P85 here (http://www.hmrc.gov.uk/cnr/p85.pdf)

Also let National Insurance office know, child credit etc

Best of luck
Paul

[fish13]

Many thanks Paul, great reply.

I've only got the one house and won't be making any profit on it, just covering the mortgage. I'll also be paid in NZ dollars so won't have any other income here in the UK whatsoever.

Many thanks for the link to the form, much appreciated. Didn't think about the National Insurance office, thanks for the tip.

Cheers again,

Hugo.

[Super_BQ]

I've heard of stories of NZ students racking up large student loans and taking off overseas for some considerable amount of time. Upon returning to NZ they were faced with a huge tax bill the minute they meet immigration.

Even those that have had huge tax bills to pay with IRD and managed to skip overseas, the real question one must ask, "How long do you plan to stay overseas?" Sooner or later, that person has to come back to NZ to face the noise - ie. funeral of a close relative, etc.

I've got countless of stories from Canada's perspective. Lots to do with improper paperwork, trying to declare non-residency when the facts point otherwise (ie. bank accounts, driver's license, real estate, dependant children, etc that all point to an intention of coming back to the country).

Of interest, residency in Canada has nothing to do whether you hold a citizenship with the country or not. There have been cases where a person tried to be a non-resident in Canada but (ie Hong Kong citizen & lived out of the country for more than 183 days) and the courts ruled he was a resident of Canada (because of his 'economic' & 'social' ties with Canada) and thus, all his world wide income had to be taxed in Canada. As some know, income tax rates in HK are incomparable to the rates in Canada.

There has been cases where a Canadian citizen of Canada tried to be a resident of Canada (for social benefits? payment into superannuation/pension, free health care, etc.) but the courts ruled he/she had insufficient ties with the country and deemed the person a non-resident.

As Res ipsa loquitur applies. I don't doubt the UK's tax system is much different in regards to residency.

BQ

[MarkS]

Hi Hugo,

I'm no lawyer (tax or otherwise), but I think you should be ok, as Paul says above. UK residency is primarily based on the number of days in or out of the country. You definitely should fill in the form that Paul linked too (ooops, haven't done mine yet....)

Tax in these situations really is a minefield, we've pretty much sold up in the UK leaving only our pensions behind which helps a lot, but even that still leaves plenty to think about. Good luck!

One more thing...

As Res ipsa loquitur applies.

How? Res ipsa loquitur is primarily used in negligene claims. See http://en.wikipedia.org/wiki/Res_ipsa_loquitur

Apologies for the UK specific quote, but I'm reminded of:


Rimmer: 'That's it, I'm invoking Space Corp Directive 39436175880932/B.'
Kryten: '39436175880932/B. "All nations attending the conference are only allocated one parking space." Is that entirely relevant sir? I mean, here we are, in mortal danger and you're worried about the Chinese delegates bringing two cars.'
Rimmer: 'Can't you let just one go, I was talking about the right of POWs to non-violent constraint.'
Kryten: 'But that's 75880932/C, sir.'

[Super_BQ]

How? Res ipsa loquitur is primarily used in negligene claims. See http://en.wikipedia.org/wiki/Res_ipsa_loquitur

Not always as if you read further, many countries don't always recognise or accept this doctrine/idea. However from my readings, it's quite obvious for the tax dept. of many countries to use this terminology on getting back taxes. ie. It's quite obvious a person didn't want to pay their income tax by hiding their income in overseas Swiss bank accounts.

IMO, the "reasonable person test" would be more relevant to cases of negligence than "res ipsa loquitur". But from the plaintiff's perspective (the tax dept.) I would say the latter is more convincing against the defendant (the tax payer).


BQ

[Super_BQ]

For those from the UK, i'm curious if there were any other forms to fill out?

When I left Canada, residency wasn't by matter of personal choice. I did have to fill out a special 2 page tax form which was quite interesting. The form had like 20 (check mark box) questions much like the ones you see on the arrival / departure cards at international airports.

Rather than just a form to say how long you intend to be away and such, the form asked other dubious questions such as:

i) Will you be holding a bank account?
ii) Will you be holding your driver's license?
iii) Will you be leaving any assets valued at $100,000 or more in Canada after your departure?

It was quite obvious that these questions were used to determine the person's actual residency ties with the country. (both social and economical)

To my surprise I got a confirmation letter from the tax dept. saying I was granted "non-residency status".

Funny how I say "granted" because i'm sure there are those that would of been deemed resident in Canada (if they check marked the wrong boxes) when they had all full intentions of leaving the country.

Though I clearly remember studying income tax at uni that the act specifically says a person can be resident in more than one country - regardless of you've stayed for more than 183 days or not.

It's more of a bummer for US citizens living overseas because no matter how long they remain outside the US, they're required to file a US tax return to the IRS every year for as long as they live. I've not heard of many that would go through the process of renouncing their citizenship in order to save from this inconvenience.

BQ

[Rabbit]

I recieved a letter from the UK tax authorities last week saying that next year (this tax year) and there after I no longer have to complete a UK self assessment form (tax return) even though I have rental income from my UK property. They said my rental income was probably less than my personal allowances. They also said if my circumstances change, e.g. want to give them some money, then please let them know, especially in terms of any UK income. Quite civilised really.

Nice to get out of the UK Self Assessment tax regime. :yes