Dubai first

[billyboy26]

I am going to work in Dubai for 20 months. During this time I would like to sell two non PPR properties in the UK. I then intend to immediately work in Spain for at least 6 years. I know Dubai is tax free and Spain is not. When I move to Spain will I then have to pay their CGT rate for the 2 earlier UK sales. Having sold in Dubai is the sale during that time (20 months))then CGT exempt. I assume Spain can't stake any claim and neither the UK on my return 7 years later.

[tax me less!]

You continue to sail close to the edge.

See the previous comments to your previous post here:
http://www.taxationweb.co.uk/forum/discuss.php?id=24299

In essence it is likely that either the UK or Spain would charge tax.

I cannot see why 18% UK tax is so terrible given the movements in property prices; but from a tax perspective I recommend you get a good adviser to instruct counsel.

[JSK TAXATION]

billyboy26,

In order to avoid a CGT charge in the UK it will be necessary to sell the properties in a tax year following that in which you leave the UK.

Providing you are then resident in a jurisdiction which either doesn't have a CGT regime (eg Dubai) or 'washes out' gains on immigration then the gain is tax free at the point of disposal.

Should you return to the UK within 5 complete years then the gains would crystallise as far as the UK is concerned in the year of arrival.

This a well trodden path and not contentious. Let me know if you would like help in organising this for you. Kind regards,

John S King
Chartered Tax Adviser
www-taxation-advice.com

[enquire4all]

Hi tax me less suggests "that either the Uk or Spain would would charge tax" However, John S King advises "this is a well trodden path and not contentious. Two different opinions must be very confusing for readers and surely this out of the UK action has been tested in Court by "counsel" I think tax me less like the revenue doesn't mind people paying tax especially at 18%. Food for thought.

[tax me less!]

As is well known the UK does not have a statutory residence test and liability to UK CGT is based on ordinary residence.

It is quite possible in the circumstances described to be absent from the UK but remain ordinarily resident.

The leading case remains Clark, but given the limited evidence of acquiring ordinary residence & HMRC's current attitude counsels opinion would be wise.

[JSK TAXATION]

All contributors,

tax me less is definitely getting his wires crossed! This issue would not need Counsel opinion.

There are no mechanics for taxing a capital gain on UK situs assets for non residents unless they re-takeup residence within 5 tax years of leaving the UK in which case the gain crystallises in the year of return.

If an individual states he is leaving the UK permanently (which he would have to in this case), then it is true that HMRC can hold off giving a view until 3 years have elapsed since departure, but this is not something that requires Counsel opinion.

The main difficulty I have found in this area is making sure that an effective contract isn't in place before the individual leaves the UK. It is very easy for the individual to virtually agree to a sale, then leave the UK with the sale following through after departure. In these circumstances HMRC can argue that the sale took place whilst R/OR and therefore still taxable in the year of departure.

Careful planning and attention to detail is what is needed!

John