Possible £114k tax bill from income earned abroad as now UK tax resident.

[tuthai]

I am a British citizen that has lived in Hong Kong since 1999. During my time in there, I invested in a property and sold up prior to repatriating back to the UK in May 2017.

I bought my property under an LLC I set up, where I was the only shareholder. The purchase was made in 2010 for £400,000, and sold in April 2017 for £1,000,000 (fortunate). FYI - the reason ownership through an LLC was because I was renting it for some time and this made sense from a logistics standpoint and personal tax standpoint in HK - all perfectly above board. Also note that in Hong Kong there is no capital gains tax, or dividends tax. In the UK it is 20% for both.

My accountant in Hong Kong declared an interim dividend in April 2017 when the property was sold for the full amount. The issue is, because the money was not physically transferred into my personal account from the LLC's business account, I am afraid that I may be liable for UK tax now that I am a UK resident as of May 2017. The money was earned in Hong Kong and is still in HSBC in Hong Kong but once I transfer it to HSBC in the UK I believe I will be liable and the bank will notify because of money laundering suspicion and I am now a tax resident here.

I am beginning my investigations but any advice here would be much appreciated.

Thank you in advance!!!

[maths]

I assume the property was HK located and not in the UK.

The capital gain within the LLC should not be subject to UK CGT on the part of the LLC or you as sole shareholder assuming that the sale took place before you re-acquired UK residency.

Dividend income paid after becoming UK resident will be liable to UK income tax.

[tuthai]

Yes property located in Hong Kong.

Yes the property was sold before returning to the Uk and the money just sat in the company account in HK.

The money was not earned while I lived in the UK, the interim dividend was issued ie: booked in the company accounts so the company shows a liability on the balance sheet, but the money was never actually paid out.

Does that still mean if I transfer the money now from HK to UK I will have to pay the UK income tax?

[DavidTreitel]

The company is UK resident as it is managed & controlled in the UK (it was imported to the UK when you became UK resident).

[maths]

David Treitel's comment may or may not be relevant.

It is unclear in the posting that the company in fact became UK resident. There is no information as to where the company's central management and control is or has been exercised post the individual's return to the UK.

However, even if the company has become UK resident this does not impact on the taxability of dividends unless the dividends declared were interim dividends (which seems unlikely) or final dividends declared when the company was UK resident or were declared whilst non-resident but with a payment date falling after the individual acquired UK residency.