Can the UK Inland Revenue pursue me in Australia?

[bobxyz999@yahoo.com]

Hi,

I am an Australian who resided in the UK for
around five years until moving back to Australia
over a year ago. While in the UK I worked as an IT
contractor and took advantage of a marketed tax
minimisation scheme.

The UK Inland Revene wrote to me in December
challenging the scheme and stating thay they were
opening an enquiry into my 2003 and 2004 tax
returns. They threatened to initiate formal action
to recover what they consider to be unpaid taxes
if I don't agree to a settlement.

If I were to decide not to pay any taxes deemed to
be owing, would the Inland Revenue have any way of
pursuing me in Australia? If not, what would
happen if I were to return to the UK to work? How
about if I were to visit the UK but not work
there? Or if I were to travel to other countries
in the EU?

[CDavies]

I know the UK Inland Revenue have a special unit in Bradford dealing with collection of tax from non-residents (both EU and non-EU).

If you comply with the enquiries the actual tax you'll have to pay may be less than that otherwise determined by the IR. Also if you co-operate, penalties can be reduced.

I would of course suggest you see a solicitor.

Carl
carldavies1@yahoo.co.uk

[Taxbar]

We are dealing with several similar situations for clients at the moment.

If the UK wrote to you they must have your Aus address?

Depending on the scheme, you need to take UK tax advice.

There maybe provisions in the Double tax treaty where they can exchange information with the Aus Revenue.

If you return to the UK with this matter open then you will be pursued for the debt. If you go anywhere in the EU then the MARD provisions theoreetically oblige the local tax authorities to enforce the UK tax debt if they know you are
living there.

Daniel Feingold
STP
info@stratax.co.uk

[johnfkavanagh]

I too have come across similar situations where umbrella schemes which have been marketed to contractors are now being scrutinised by the Inland Revenue Special Compliance Office. I imagine Daniel has seen similar cases.

It seems to me that the Revenue's approach has been extremely heavy-handed (not that that is uncommon nowadays). Depending on the facts, it is, of course, by no means impossible that no tax liability would be due if the matter is properly defended but there seems to be a use of scare tactics to cow contractors into submission. I do agree that burying one's head in the sand is not a good option, and if the tax is indeed determined to be due, the possible consequence of "walking away" is that a crime may have been committed.

I think it is important that contractors who find themselves in this situation should take their own independent advice on the matter. In particular, relying on the administrators of the umbrella company to resolve any dispute with the Revenue may be an unwise option; in my opinion, there are obvious conflicts of interest between the companies that marketed the schemes and the contractors who participated in them and it amazes me that in some instances, tax advisers have accepted instructions to act for both despite those conflicts.

John Kavanagh CTA FRSA MIoD Cert PFS
UK Tax Consulting Ltd
Chartered Tax Advisers
www.uktaxconsulting.co.uk
mail@uktaxconsulting.com
Tel: 020 7060 1660
Fax: 020 7060 1663

[SBDickenson]

Good morning - I am in the virtually the same situation as Bob posted back in 2005. I've received APNs from HMRC for the years I belonged to a scheme when I was contracting in London 2010 - 2013.

Theres no way I can afford to pay the GBP amounts they're asking without going bankrupt. The question I have is, does the HMRC have the power to legally recover the money owing from me whilst I remain in Australia?

I've read up on MARD and Australia does not appear to be be part of that. Is that right? Are there other tax agreements HMRC have with Australia that empower them to recover money they estimate to be owed according to the APNs?

Any advice you have on this matter would be appreciated.

Sincerely
SBD

[bd6759]

If you owed me money, I could legally recover it from you in Australia.

With tax, there is a Mutual Administration Assistance Convention. It means that HMRC can ask ATO to collect it on their behalf. The ATO will treat it as if it were a debt to them. Br grateful you are in a country that doesn't treat unpaid tax as a criminal matter.