Wealthy British citizens fleeing the Gulf war are seeking refuge in countries such as Ireland and France to avoid huge tax bills in their home countries.
Facing potential lawsuits from HM Revenue and Customs, high net worth individuals who had been living in the UAE and neighboring countries are hoping to wait out missile and drone attacks elsewhere rather than return to the UK.
With only about three weeks remaining in the current financial year, many overseas residents have already “spent” their allotted days in Britain without incurring tax obligations. Some are seeking guidance from HMRC on whether they would be granted an additional 60 days under an “exceptional circumstances” provision.
Nimesh Shah, chief executive of advisory firm Blick Rothenberg, said: “I have received a disproportionate number of calls from people wanting to leave the UAE in recent weeks.
“I have told them not to rely on any HMRC exceptional circumstances provision. I can’t imagine HMRC will be very understanding here.”
Shah added: “There are UK taxpayers who have decided to leave to go to places like the UAE. In HMRC’s mind, they have chosen to go there to not pay tax in the UK. They are not going to give you the green light to spend more time here and not pay tax.”
For those who have been non-resident for less than five years, it is not just the current year’s income tax that could be within HMRC’s purview if they return. They could also face capital gains taxes on any assets or businesses sold during the period they were away.
One very wealthy businessman told The Guardian he would spend time in Dublin until they could visit London after April 5, when the 2025-26 financial year ends.
“I’m happy to pay income tax and investment tax next tax year, but I don’t want the sale of a business I sold years ago to come into UK capital gains tax,” he said. “By the way, I paid for my own trip home.”
Another British businessman based in the United Arab Emirates said he would spend some time in France for now.
If someone claims to be non-resident for tax purposes, the number of days a person can stay in the UK depends on several tests. These measure your links to the UK and can include whether you have accommodation, a spouse or children in the country.
For many people who have left in recent years, this may mean being allowed as little as 45 days in the UK before falling back into the national tax regime. Others may be allowed up to 183 days in a tax year, depending on their circumstances.
During the Covid-19 pandemic, HMRC allowed some people to spend more than their allowance without becoming tax resident in the UK. This 60-day exceptional circumstance provision was accepted for those cases where people could demonstrate that they could not leave the country due to the closure of international travel. To be successful, they had to demonstrate that efforts were made to leave the UK.
This is unlikely to apply in cases this time, tax advisers said.
Travel orientation is also a factor. The UK government’s travel advice for many of the affected countries, such as Bahrain, is “near essential travel”, but according to guidance on the HMRC website, the exceptional circumstances provision would only come into force if the Foreign Office advises “no travel” at all.
David Little, partner at wealth management firm Evelyn Partners, said: “Even a few more days in Britain can have significant consequences,” and income and investment gains around the world could be subject to tax, just like those in the UK.
He added that for those who left and then sold assets, a return to the country could trigger a tax liability, with profits from a few years ago “retrospectively falling under UK tax on their return”.
