Thanks for your question, which I will try and help but you could be best placed in seeking a one to one consultation with an accountant/specialist that is familar with HMRC investigations.
But lets see if this fourm can help. So please advise me -
1) When you say that the goods are sold in the UK, can you advise how this actually takes place, do the goods enter the UK prior to sale, and are sold from a location within the UK?
2) you advise you are resident in both the UK and in Hong Kong, please advise what ties you have in the UK, and how much time you actually spend in the UK (for the last 5 tax years or less than 5 years if you have been trading for less time) and whether any of these visits to the UK are for work purposes.
Goods are produced & sold directly to third part clients via express post & on occasions when I travel to UK. The Company has no representative in UK/Europe. Have advise from HK account advisor that tax is accessed & payable to Hong Kong Tax Authorities as there is no product content in UK. I have been Hong Kong resident since 2007-with residence. I also have residence in UK. 90% of company business is transacted in Hong Kong. HMRC have trapped banking activity i.e receipt of funds revenue deposited initially in UK bank i.e. the bank operates as HARRY SYMINGTON trading as Eldonn Jewellery. Cannot legally open company account without registering the company in UK. Both myself & company have been accessed for tax since 2006/7 by Hong Kong Authorities. HMRC has asked for face to face interview. Am I obliged to do this & or can I ask for formal questions from HMRC. Please advise.
PS I spend approx.60% of my time in Hong Kong annually
Thanks for your reponse and the additional information
Can you clarify
1) You advise that you spend approx 60% of your time approx in Hong Kong annually but I need the actual days you have spent in the UK during 2006/2007 (If applicable) 2007/2008, 2008/2009, 2009/2010, 2010/2011 and 2011/2012 and finally 2012/2013.
And other than bringing goods sometimes, is there any other work undertaken in the UK
2) Do you stay at the residence you own in the UK, does anyone else live there. or has this property ever been let out to tenants?
3) You are obliged to attend the HMRC interview.
I am trying to establish whether due to non residency, there is a cse to argue, but failing that, certainly you have the fact, you have been charged tax as a double taxation agrgument (as we have a tax treaty with Hong Kong) but it may just be a case that you should have been considered for tax, due to the the fact you seem to spend more than 90 days in the UK and have a residence at your disposal, and its this I need to establish, to assist you further.
Effective from April 1, 2011 - Double Taxation Agreement UK/HK, reflects no double charge for individuals & or business partnerships. You are probably aware as British passport holder there is no record of arrival/departure through UK ports and or Europe. Most arrivals are through the city of Dublin, Republic of Ireland. My residence is in Northern Ireland. Permanent residence in Northern Ireland is not leased - family members reside there. No additional work is carried out during visitations.
2006/7 -120 days approx.
2007/8-163 days approx.
2008/9-180 days approx.
2009/10-110 days approx.
2010/2012 - 90 days approx.
Thanks for the response and the days in the UK
As you have spent more than 90 days each ttax year, you will be treated as resident in the UK for all years.
This means if you are a UK citizen, then you remian liable to tax on your worldwide income, and should have advised HMRC of your income position each year, but also advised them of the tax suffered in Hong Kong, which would have been treated as a reduction against any UK tax due.
Your best approach, is make arrangements to meet up with HMRC as they have requsted, taking along all the details of income and expenditure, and also the tax suffered through the Hong Kong tax system. (So any official documents pertaining to this)
HMRC are interested what you drew as income as an individual, rather than the company position, but take all papers along for them to see what income has been drawn over the relevent tax years)
And arranmgments that do not allow the double taxation position due to the traty arramgements agreed from June 2010 - effective from April 2011, still allow the tax suffered as an "expense" from the UK tax position
So for all yaers, you either have the benefit of actual double taxation , or the bebenfir of being permitted a credit (through the form of an expense) of the tax suffered.
So unless the tax due under the UK tax regime is more than the tax suffered through the Hong Kong syetem, will you be in a position that you owe HMRC tax, and if in fact the UK tax due is less than the tax suffered already, then you will owe nothing, and only have to address the fact that tax returns should have been filed (main tax return, foreign income page and a residency page) and this may leave you with a few penalties to pay.
And for the last tax year when you only spend 90 days in the UK, that tax year, is just a repoerting excercise, as oyu are under the permitted 91 days.
If tax is owed, then there will also be penalties for the late payment of tax.
Plus the fact you are entitled to UK personal allowances for relevent years.
It would be prudent that you do seek support from a local UK accountant familar with both double taxation, residency and foreign income, as I feel you would find this invaluable. But at face value your position does appear to be more favourable to you, rather than HMRC.