How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Sam Your Own Question
Sam, Accountant
Category: Tax
Satisfied Customers: 14195
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
Type Your Tax Question Here...
Sam is online now

I moved to Australia November 2014 and have no intention

This answer was rated:

I moved to Australia November 2014 and have no intention of returning to the UK. I am very familiar with all the Statutory non-residence criteria and fulfil the 3rd Automatic Oversea's test. My family moved with me, we have no property in the UK, our entire life in the UK has ended and I work full time in Australia. I do, however, own 43% share of a UK business that is being sold. The sale has been delayed, as it was schedule to go ahead October 2015, but will now be completed by October 2016. I understand that I have no UK Tax liability in regard to the sale of my shares and I'm clear as to my tax liability in Australia.
I do, however, remain a Director in the business and have a Skype meeting once a month to review sales turnover. I'm not paid for this work and there has been no dividend payments over the last 3 years and non are anticipated until the business is sold. In effect, I receive no income from the business.
My question is: does the fact that I'm a Director of a UK company, in itself, have any effect on my status as non resident for UK tax.
Hi Thanks for your question - I am Sam and I am one of the UK tax experts here on Just Answer (and ex HMRC with my own accountancy business) You do have a UK liability on the sale of your shares as this sale arises on an interest you have in a UK company even though you are not physically in the UK under the capital gain regime IF you were to return to live in the Uk within 5 years of this sale taking place. Otherwise you are right you have no capital gain to consider but may have an Austral***** *****ability to declare - so do check their tax regime and requirements, as you (I assume) will be bringing this money into their country. Now your main question which asks whether you position as non remunerated director within this UK caompnay and whether this affects your tax non residency - the answer is NO it does not, as 1) You are merely having meetings that are conducted out of the UK2) You receive no payment (either salary remuneration or dividends) So this changes nothing Let me know if I can assist further Thanks Sam
Customer: replied 2 years ago.
Hi Sam
There is no Australian tax liability on the sale of my UK shares. I'm resident in Australia on a 457 Temporary work visa. As such, they only have an interest in domestically sourced income. Even if I took out Citizenship, the Australian tax authorities would consider at that point in time my total assets as the basis of any capital gains calculation going forwards, they don't look back. My 457 visa lasts 4 years and can be extended for another 4 years. I am being very careful and have no intention of doing anything in the next 5 years that would cause me to fail the Third Automatic Oversea's Test. The 457 visa is sponsored by my UK business. In effect I'm an overseas employee of the company, my salary is paid in Australia on which I pay Australian tax and I do no work in the UK as part of my employment, other than the Director role I have already detailed. Would the fact that my company is the sponsoring business for my 457 visa complicate matters at all?You STATED: you do have a UK liability on the sale of your shares as this sale arises on an interest you have in a UK company even though you are not physically in the UK under the capital gain regime IF you were to return to live in the Uk within 5 years of this sale taking place.To CLARIFY: I read the above as - even if I am a director (no salary, no dividends, etc), then I have no UK tax liability on the sale of my UK shares, UNLESS I "return" to the UK within 5 years (read become UK tax resident) - which of course I have no intention of doing.At this stage I am just preparing the ground for the sale of my shares. Prior to the sale, I will take extensive UK tax advise, to make sure I make no mistakes. I just don not want to put a foot wrong at this early stage, which would take me down a path that would have negative implications for my tax planning later on.RegardsMick Atkinson
Hi Mick
Thanks for your response
Thats fine re the Australian tax position because we do have to pay tax somewhere - and I am not an expert on Australian tax and would not wish to profess to be so as we are UK tax experts!
But it would seem you have looked into this and have no liability and also re the UK directorship - if they have sponsored the Australian position then this could have implications as this could be argued to be a benefit/remuneration if a cost is involved - can you advise further.
And you are absolutely doing the right thing by prepping all the groundwork - its a very sensible approach
Customer: replied 2 years ago.
Hi SamThere is no visa or moving costs etc for the company. I was careful to pay that all personally. The UK company (of which I'm a 43% shareholder) pays me a salary of 120,000 Australian dollars per year and absolutely nothing else. This is for my role in Australia, developing the Pacific Rim market. Apart from my remote Director function (which at a real push I could give up), I do no work for the UK business. My Australian salary is paid into my Australian bank account and this income is declared in Australia and I pay my local taxes on it. I occasionally visit the UK, but do no work for the business, just an ocassional shareholder get together over lunch. I do not expect to visit the UK, in any one year, over the next 5 years for more than 60 days, which I understand is well within the maximum of 91 days allowed under the 3rd Automatic Overseas Residency test. Note: that I may need to offer the new owners up to 60 days a year work in the UK for a couple of years (Eg. less than 31 days doing 8 hours a day plus the remainder less than 3 hours a day) as a handover. If not then I will not visit the Uk at all. Any Uk handover work would simply be included as part of my salaried job in Australia, as this would continue under new ownership.We moved to Australia primarily for the lifestyle, but considered carefully our tax position as we could have equally chosen Spain, France, etc. My LTD UK company sponsoring a 457 visa for entry into Australia was my preferred choice. This means that I would pay no CGT on the share sale and could keep any proceeds offshore, so there would be no tax on our investment income, while living in Australia. If the 457 visa route SUBSTANTIALLY complicates my UK tax position, I could become permanently resident and take Citizenship in Australia, but this would take some time (18 months) and a substantial effort to organise. There would also be tax implications in Australia on my investment income, but not on the sale of my company shares, as there would be no Australian CGT as discussed previously.I do not mind paying tax wherever on the $120,000 salary, as this is a relatively insignificant amount. The big hit initially would be the CGT on the sale of my shares, if HMRC could argue that my work in Australia / remaining a Director of the UK company (through to the sale of my shares October 2016) equated to me being considered UK resident for tax purposes, as the share value will exceed the limit for 10% entrepreneurs relief.
Thanks for your response - and apologies fro my delay - our time zones are not fully compatible ! :)
If the UK company pays you a salary - then I assume you have got HMRC to agree NT (NO Tax) code to operate against this salary - due to the fact that you are in the Uk for less than 91 days a year none of which are for work purposes?
But then you advise that you do no work for the UK company - so I am confused why they would then pay your salary?
Are you paying Australian tax on the salary? Is this forwarded to an Australian company - for them to then pay you?
I will also advise if you then work 60 days a year in the UK to facilitate the sale to the new owners these 60 days will remain liable to UK fully.
And t may be that as AUS will not tax the shares that you remain liable to the sale of these remain liable in the UK - as I have already advised we all have to pay tax somewhere.
This certainly is exceptionally complicated and not fully compliant with your UK tax position at face value.
SO please advise the points I have raised
Customer: replied 2 years ago.
Hi SamThere was a full time job vacancy in my Company to develop the Pacific Rim market. This job was to be based full time in Australia, no work in the UK was required. The job was open to domestic applicants in Australia and anyone from the UK head office, as the company agreed to obtain a 457 skilled migration visa if required. I took that job. The job pays $120,000 per year. This is currently paid by the UK business (the visa sponsor) directly into my bank account in Australia and I pay Australian tax on this money, as I’m no longer resident in the UK for tax purposes as discussed previously. If it is an issue that the UK business pays my salary directly, then I can look at having it paid in a different way, but the way it's done currently is not an unusual arrangement for smaller International businesses operating in Australia, that do not want to open an office and a subsidiary business.In addition, I’m a remote Director, as previously advised. I am not paid for this role and no dividend is paid. This will end on sale of my shares.In future I MAY be required to work in the UK for up to 60 days. I will not be paid an additional amount for this. They will simply say “come over as part of your job developing the Pacific Rim”. It will not ben seen as contributing towards the UK business and even if it is, I will look at a split treatment and the tax on an income of $120,000 is not going to be very much.As I understand the non residency rules, you are not liable for UK CGT if you are non resident in the UK for a period of at least 5 years, including the year in which the Capital Gain was made. It’s does not seem to be relevant where I do or do not pay tax elsewhere, as this is not a double tax treaty discussion. In reality, I will be paying my tax in Australia on the sale of shares, but in this instance according to the Australia tax rules, my CGT liability on the sale of my shares is zero. It would be the same if I lived in the Cayman Islands or any other tax haven or on a boat, except that Australia is in no way normally considered as a tax haven. This CGT treatment is available to 457 visa holder’s, Permanent visa holders and Australian Citizens alike. In addition, the 457 visa means that the Australian tax authorities are not interested in any offshore assets I may have, they only tax you on domestic sourced income. Again, if I invested the money from my share sale in UK share on the stock market, I believe I would not be liable for UK tax as a non resident on dividends etc. As a 457 visa holder living in Australia, I would not be liable for tax on that income, as it's not domestically sourced. This is the advantage of a 457 visa. It has some downsides, like University fees for my children who are classed as International students are substantially higher than for a domestic student and you need to take out your own private medical cover etc.I hope that this clarifies things a little more? I would like your comments on the Uk business paying my salary directly and any complications this may cause.
Thanks for your response
Ah I see - a job within a company for whom you are employed - and then also a director of your own company - two separate positions.
Then with the paid employment - you are currently still employed by the UK - and therefore any days you spend in the UK for work purposes (aside from meetings or training) will have a UK Tax consequence. And then the non residency looks at you not spending more than 91 days in the UK (which looks at ALL days whether for visits or work purposes)
So whilst this question asked re the sale of shares and your remote non paid directorship - would that the fact this directorship itself affect your being treated as not resident - we seem o have got into a deeper discussion -
I think you also note there is no such thing as a tax haven - its a myth - if you have a UK liability that has been dismissed due to your non residency and the new country in which you reside does not consider it a tax position - then the UK has the right (as both the originating country in which the liability arose and the fact you are British born and bred to hold onto that liability - and the double treaty position ALWAYS exists - its not something you evoke -
You do not even have permanent residency in Australia this is just a temporary work visa -
I assume you filled in form P85 for HMRC so they could officially determine your residency position and they agree there is no tax liability on the shares.
But in answer to your original question - your directorship has no bearing as this stage, it just create a tie in the UK should your residency need to be looked at on the statutory tests basis. At this time, you meet the immediate position of having left the UK to live and work abroad with visits no less than 91 days, none of which are for work purposes.
But if you then start to undertake work in the UK (doesn't matter than it will not lead to additional salary - or the fact the salary originates from the UK - its the fact some of the salary you are paid arises from work you will undertake with a UK company and carried out in the UK)
You already have a second tie in so far as your salary is paid from the UK and I have to assume the correct procedures have been carried out both by you and the company whom employs you on that factor.
But even at that point with only two ties in the UK (I state two as you do not indicate you own property or have a spouse or child(ren) still in the UK you can spend uo to 91 days in the UK
The real crux here is the time you may spend in the UK working
Whether you and your employer have informed HMRC of this working abroad for them to agree your residency position
If Australia will not tax the sale on your shares then with no permanent residency status in place with Australia - I am not sure how you can say with certainty that you will remain out of the UK for more than 5 years and this you need to consider carefully.
I may be giving you advise over and above the question asked - and it may be that the information you supplied in your original post has more to it - and I am offering advise on a half baked position and understanding. But I am sure you can appreciate if I didn't read your WHOLE question and sound alarm bells with the points that were not completely accurate -after all thats what we tax experts are for!
So I certainly do not mean to question your position so rigorously if you have everything in place with HMRC.
Do let me know if I can assist further
Please let me know if I can assist further. If you have all you need then it would be appreciated if you could take the time out to rate me for the level of service I have provided (or click accept) as this ensures that Just Answer credit me for my time
Sam and other Tax Specialists are ready to help you