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Buachaill, Barrister
Category: Law
Satisfied Customers: 10954
Experience:  Barrister 17 years experience
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A friend of mine from non-EU country moved to UK in 2007 to

Customer Question

A friend of mine from non-EU country moved to UK in 2007 to get married, she sold her overseas land in 2008. She got her citezenship in 2010 and believes that she became domiciled only when she did it. She didn't declare her CGtax at this time and she started to work in 2010, and then she started to declare her income and self-employed income to HMRC. The accountants that worked with her resigned this year as soon as she revealed this fact to them. She is eager to pay CGtax if necessary, although income was never sent to UK, and most of it was spent on holidays, etc. What does she need to do in this situation? Does she need to declare it post-factum? What implications could it have?

Submitted: 4 years ago.
Category: Law
Expert:  Buachaill replied 4 years ago.

Buachaill :

1. As you are probably aware, it is possible to be resident in the UK BUT NOT domiciled in the UK and therefore only have to pay Capital Gains TAx on any funds remitted to the UK. However, from teh facts you have narrated, once your non-EU friend got married in the UK in 2007, she became ordinarily resident in the UK. this exposed here to a liability to Uk Capital Gains TAx. Therefore, when she sold her foreign property in 2008, she also attracted a liability to UK Capital Gains Tax as well as any taxes payable in whatever country the property was located in. She will have the benefit of any Double Taxation Treaty in place between the UK and this country where the property was sold, whereby credit will be given for any tax already paid. However, owing to her ordinary residence in the UK in 2008, she has a liability in the UK to CGT on all monies received for those property sales and not just the monies remitted to the UK.

JACUSTOMER-y0xrvggh- :

What about the question of domicile? At this year she was planning to get divorced and finally admited her domicile in 2010 when she got her citezenship. In 2008 she had a property in this non-EU country and a parent left there.

Expert:  Buachaill replied 4 years ago.
2. Domicile is only relevant if you are resident in the UK but not ordinarily resident in the UK. Upon getting married in the UK, your friend became ordinarily resident in the UK which gave rise to liability to both UK Income Tax and Capital Gains Tax. Having a parent in a non EU country makes no difference to her ordinary residency in the UK and her liability to all Uk taxes, including CGT.
3. You should also realise that her former accountants would not abandon ship like rats unless there was a serious problem here. Accountants can have a personal liability if they assist a client in tax evasion. So that is why she has been left in the lurch.
Customer: replied 4 years ago.

What are her best actions now then?