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Max Lowry
Max Lowry, Advocate
Category: Law
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Experience:  LLB, 10 years post qualification experience
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Can a non UK resident be made bankrupt in the UK? The non resident

Customer Question

Can a non UK resident be made bankrupt in the UK? The non resident may be a UK taxpayer
Submitted: 3 years ago.
Category: Law
Expert:  Max Lowry replied 3 years ago.
Hi, welcome to the site. My name is XXXXX XXXXX I will help you with your question. Could you tell me, is the resident living and working in the UK?
Customer: replied 3 years ago.

The resident has been living for past 6 months in UK but is considering moving abroad again.


The resident will change status to overseas residency and may change tax residency.


My understanding is that only residents of England & Wales can be made bankrupt in England & Wales.
The question is if the person in question in not a resident in England & Wales but still pays tax in UK can they be made bankrupt in England & Wales or would the bankruptcy order have to be made in country of residence?

Expert:  Max Lowry replied 3 years ago.
Thank you. And the debt in question is in respect of a UK creditor?
Customer: replied 3 years ago.

The debt is from a Luxembourg creditor.


So non Uk resident (resident in Portugal) but UK tax payer with Luxembourg debt.
Can Luxembourg company initiate bankruptcy proceedings against the non UK resident (but UK taxpayer) in England?

Expert:  Max Lowry replied 3 years ago.
Ah, I see. That puts a slightly different perspective on things. I need to know please on what basis the resident pays UK tax.? Does the resident trade/carry out a profession mainly in the UK ?I will provide the answer when you have answered these questions.
Customer: replied 3 years ago.

Currently the resident is employed in the UK but this may change when moving to Portugal whereupon the person will become non-resident and work for a Portuguese company but prefers UK taxation rates and to maintain a UK tax record.


Expert:  Max Lowry replied 3 years ago.
Thanks.

There are many difficulties for the Luxembourg creditor. It will first need to obtain a County Court Judgment against the resident. It cannot however do this against a UK resident if the resident is living outside the UK. If the UK resident is in the UK, he/she can be sued through the UK Courts and the creditor could get a CCJ in its favour. Alternatively, the creditor could go for a European Payment Order which allows collection of uncontested UK debts without a CCJ. This can be enforced through the UK High Court. The costs of these procedures are not always cheap and the creditor would need to consider whether it will get any money back from the resident if it sues them.

However, even if the creditor gets this far and a bankruptcy petition is issued on the back of the judgment, the UK Court will need to be satisfied that the resident’s centre of main interests (COMI) is in the UK at the date the petition is presented – therefore, the location of creditors and the country in which the debt was incurred are not important issues in determining COMI. The resident could argue that COMI is not in the UK and the UK Courts have no jurisdiction to deal with the petition.

The UK Court will consider where the resident’s COMI is. At present, the law does not provide any definition for COMI but it is usually the place where the debtor conducts the administration of his interests on a regular basis and has done so for at least 6 months. Generally, this will be the country in which he mainly carries out his trade, profession or self employment. Where the debtor does not trade or carry on a profession, the state in which he/she habitually resides is considered to be the COMI. Where the debtor resides in one country but trades in another, it is the country in which the trade is carried out that is considered to be the COMI.

The creditor would need to show the Court the resident’s COMI is in the UK – here the Court will look at whether the resident has any UK debts.

Whilst the creditor could in theory proceed with a bankruptcy petition in the UK against the resident, it is I believe, unlikely especially in light of procedural difficulties. Generally, however, for any debt across the EU, a debtor must be sued in the country in which they are domiciled regardless of nationality.
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Category: Law
Satisfied Customers: 1457
Experience: LLB, 10 years post qualification experience
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Customer: replied 3 years ago.

My final question is whether tax domicile affects COMI.


 


The person in question (me, of course) plans to be resident in Portugal, working in Portugal but prefer to pay tax in UK. If necessary, I would like to prove COMI outside UK.

Expert:  Max Lowry replied 3 years ago.
The payment of tax in the UK is not in itself sufficient to show COMI. COMI will apply usually to the place where trade is carried out/where one works or where you live and enjoy your life.

Thanks

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