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Landmark Ruling Puts pressure On Tax ExilesDate: 19 April 2010

Last month's UK appeals court ruling against a British entrepreneur who claimed to be a resident in the Seychelles is expected to have major repercussions for other Britons who live abroad or who are contemplating doing so.

The decision on 16 Feb but the court of Appeal, which upheld an earlier judgment that Robert Gaines-Cooper must pay taxes for more than a decade that he lived outside of the UK is considered key. This is because it suggests that even those who follow what many thought were firm rules governing who is not considered to be resident may in fact be found eligible for tax at some later date.

Peter Vaines of Squire, Sanders & Dempsey, which represented Gaines-Cooper said "Mr Gaines-Cooper lost his appeal because he should have known that within IR20 (the relevant HMRC guidance document) there was an implied condition (on residency) which he also needed to satisfy."

Gaines-Cooper was found to be resident and thus liable to pay UK taxes in spite of spending fewer than 91 days a year there, because the judges said England had remained "the centre of gravity of his life and interests."

Vaines said that Gaines-Cooper will seek leave to appeal to the UK Supreme Court.

The judgment coincided with reports that private equity boss Guy Hands had filed a statement on a New York court admitting that because he has become a tax exile on Guernsey, he must avoid visiting his school age children who still live in Kent with his wife and that he would only visit his parents in the UK in the event of an emergency.

His family must travel to Guernsey to see him, he was reported to have said.

The ruling came as many wealthy Britons are said to be considering leaving the UK to avoid the new 50% top tax rate, which takes effect in April and what some fear will be additional tax rises and ever greater scrutiny on high income earners by the cash strapped UK government.

Last year the Treasury created a new unit with a mandate to pursue high income UK residents leading some accountants and wealth managers to describe the environment for tax exiles as one of growing uncertainty.

Some QROP's providers, meanwhile, noted that the ruling could give high net worth Britons who live overseas a greater incentive than before to move their pensions abroad, to avoid the appearance of planning to return.

An HMRC spokesperson said the Revenue was "pleased" the court had confirmed its interpretation of its guidance on residency in booklet IR20 "and that it has agreed with HMRC that there has been no unannounced change of that interpretation."

Most sources place the number of Britons currently living abroad at around 6 million.

In another key ruling, Austrian financier Andreas Tuczka lost a residency dispute in which he claimed he had come to live in the UK to work but not to live.

According to the Tax Tribunal, he had been resident for tax purposes from the day he arrived, even though it has been the case that people can avoid paying tax if they leave the country before the third anniversary.

At the time of going to press it was not known if Tuczka would appeal.

Source: International Adviser, Helen Burggraf.

 

Pound falls against dollar and euro over recession fearsDate: 22 March 2010

The value of the pound has fallen sharply against the dollar and the euro after a Bank of England representative warned that the UK still risked falling back into a recession.

On Friday 19th March the pound dropped in value by 1.5% against the dollar and 0.9% against the euro.

The pound has been falling in recent months in the run up to May's general election. Despite officially leaving recession in the last quarter of 2009, fears are still strong and the currency took another battering over fears of a 'double-dip' recession.

The UK's current budget deficit is one of the worst in Europe, this combined with the uncertainty over a possible hung parliament in this year's general elections has dramatically devalued the pound as MP's raise concerns over the UK's high level of public debt.

BCC reports UK 'almost out of recession'Date: 13 January 2010

A recent report from the British Chambers of Commerce has increased hope for the battered British economy by stating there have been visible improvements to many areas, most notably in manufacturing.

However it warned that despite the increase of exports in the service sector, the industry as a whole was still feeling the effects of recession and urgent action was needed to "enable the UK to attain a sustainable recovery".

Director General of the BCC David Frost said there had also been growth in the employment sector.

"Businesses are showing resilience despite difficult and uncertain trading conditions. Confidence is improving, and the boost in exports must be nurtured in order to strengthen Britain's trade position globally, and to help rebalance the economy away from an over-reliance on the public sector."

The report for the fourth quarter of 2009 also recommended easier access to capital for businesses to help weather the storm as the UK attempts to bring itself out of its first recession since 1991.

Although one of the first countries to enter the recession, the UK is currently one of the last major economies to emerge from it after Germany and France started reporting positive economic growth in summer 2009.

China spurs rise in oil pricesDate: 11 January 2010

Oil prices rose to a 15 month high on Monday after reaching $84 a barrel. The gains had been stimulated by reports that the demand for oil in China had jumped by 25% in December.

The world's second largest energy consumer was a major factor in the increase of price in crude oil set for February delivery. On Monday US crude oil finished at $82.52 a barrel after falling from $83.95 earlier in the trading day.

In London, Brent crude oil settled at $80.94 a barrel.

Other factors in the price rise were pinpointed on the prolonged adverse weather in the US and Europe. Record low UK temperatures have surged the demand for gas, while Germany and France have also been using increased supplies to combat the cold snap engulfing the continent.

The value of the dollar has also increased the price per barrel as the currency is strongly linked to oil prices.

Back in the summer of 2008 the price of oil reached its record high of $147 a barrel.

British Christmas sales beat forecastsDate: 06 January 2010

The British Retail Consortium has said that Christmas sales were "stronger than we had dared hope for" as UK retailers enjoyed their best December growth for 8 years in 2009.

A surge in consumer confidence saw like-for-like sales rise by 4.2% compared with the previous gloom ridden year after a last-minute shopping spree by the public.

The current adverse weather conditions in the UK, where some places have reached record low temperatures, also significantly boosted demand for winter clothes and drove clothing sales their highest for over 5 years. RBC director Stephen Robertson has warned that despite the positive news, retailers should remain vigilant in 2010 as the uncertainty around the economy continues.

"After a surprisingly muted November, this is the best total sales growth for a December since 2005 and goes well beyond just making up for the sales fall the sector suffered a year ago. But, with customers now reacquainting themselves with concerns about jobs and tax rises there is a risk that a healthy December may be only a temporary respite on the painful road to recovery."

An array of different retailers reported boosted sales with food retailers selling more premium lines and luxuries, with online shopping sales increasing on last year's figures well due to the bad weather.

Bank of England confirms record fall in consumer borrowingDate: 06 December 2009

Recent records released by the Bank of England show that UK consumers are capitalising on low interest rates by paying off loans rather than savings. Consumer borrowing in the UK for October showed its largest month on month fall since records began 16 years ago.

For the fourth month in a row consumers repaid more than they took in non-mortgage borrowing. Although lending on credit cards rose by £134m compared with September, it was offset by the record fall of £713m on other unsecured repayments such as bank loans and hire purchase agreements.

On the secure front, the number of approved mortgages for new house buys rose for an 11th consecutive month and are up 18% on this time last year. New mortgage lending has risen since the low point of the credit crunch however the remortgage market remains stagnant.

UK recession 'worse than estimated'Date: 05 December 2009

The UK chancellor Alistair Darling is expected to announce in his pre-budget report that the economy performed worse this year than he expected, according to Treasury sources.

The official expected figure is that the UK economy shrank by 4.75% in 2009 – far more than the 3.5% that was forecast in this year's Budget back in March. Analysts believe the main reason was the extremely poor performance in the first three months of the year. The UK economy has been in an official recession for the last six quarters; however there is hope for growth next year as several other nations reported recent economic growth, most notably the US, Japan and Germany.

However Mr. Darling added that he still expected a return to growth early next year and forecast a rise of between 1-1.5% based on recent, encouraging manufacturing output figures and retail sales.

In the build up to Christmas, the Office for National Statistics confirmed that October's retail sales were up 0.4% from the previous month, while the Purchasing Managers Index showed that output had increased at its fastest rate in nearly two years.

Thanksgiving spurs US shopping revivalDate: 04 December 2009

The largest trade organisation on the world, the American National Retailers Association which employs around 1 in 5 people, this week issued promising figures that the American public is consuming again.

Apart from Christmas, Thanksgiving is the most important shopping weekend of the year and figures show that this year's spending is up on 2008 and is being considered by some economists as a sign of recovery in the world's largest economic superpower.

The amount spent last weekend totaled $41.2bn – up 0.5% on last year's Thanksgiving when the severity of the economic slowdown was still being assessed. However, even though general spending is up on last year, individuals spent on average 8% less than normal, each shelling out on average $343.

The cause for the overall rise in spending was down to more Americans – 195 million in total – shopping in either stores or online. Online spending rose 11% compared with last year to hit a record $595m, however actual shoppers showed their eagerness to prepare for the holiday with almost a third arriving at shops before 5am.

The rise on last year's spending is being welcomed by most analysts as a positive sign – consumer spending equates for roughly 70% of the US economy.

Analysts praised retailers for keeping stock levels in line to avoid the desperate price cuts that hit the holiday last year. Retailers are due to announce their sales figures in the next week to give a clearer picture of the overall months spending.

UK taxpayer bail-out 'justified'Date: 03 December 2009

An official report recently released by The National Audit Office has said that The Treasury was 'justified' in spending taxpayers money to protect the UK banking system.

So far the UK government has pumped £850bn into the financial system to ease the credit crunch and to kick start banks lending.

During the depths of the financial crisis the UK government nationalised Northern Rock when the bank showed signs of serious finance issues, before purchasing shares in RBS and Lloyds bank in return for bailing them out.

Further money was put into the Bank of England to try and protect the overall wellbeing of the UK financial system, with the National Audit Office stating "It is difficult to imagine the scale of the consequences for the economy and society if major banks had been allowed to collapse."

The report says that the final cost to the taxpayer will probably not be known for years.