Newbie CRS questions > UK

[blueswallows]

Hi folks, have been bothered by recent CRS episode and would like to seek some clarity.
I'm UK non-domiciled and had maintained personal bank accounts in my home country after the relocation. My UK address triggered bank scrutiny and was asked for self certification.
As I never had to pay tax in the uk I just put in my home country details, the bank sent another letter saying according to their data I'm resident in both my home country and UK, and that I should provide more information to clarify my position.
I did not bother replying and simply closed the accounts. The year end balance was about 60 pounds and interest for the whole year was less than 1 pound.
My questions are, is my bank going to submit my home country address and TIN etc. details to the UK? Am I likely to receive an enquiry from the HMRC? As my most updated address with the bank was my home country address, will HMRC send letters to that address? Surely it is common for non-dom people to have accounts in their home countries?

Thanks in advance

 

[Martin Everson]

Welcome aboard

the bank sent another letter saying according to their data I'm resident in both my home country and UK, and that I should provide more information to clarify my position.

So you had a UK address on home country account and then switched to home country address. They will have to report your account to both tax authorities as standard. Self Certification document brings nothing its indicia that counts.

My questions are, is my bank going to submit my home country address and TIN etc. details to the UK?

Yes if home country is part of CRS.

Am I likely to receive an enquiry from the HMRC?

What for?

Unless you remitted money to UK from that account and did not declare it you should not care if they inquire. Or did you not elect in any year to be on the remittance basis and failed to declare that account etc However the amount is so small it is not even worth worrying about

As my most updated address with the bank was my home country address, will HMRC send letters to that address?

You can call up HMRC hotline and ask them what addresses they have on record for you. In my case I was sent mail by HMRC to an old address abroad while a UK resident non-dom in the past . All was fixed with quick call to HMRC.

Surely it is common for non-dom people to have accounts in their home countries?

Totally normal and acceptable. Don't worry.

 

[blueswallows]

Thanks for your reply @Martin Everson, I have further questions if you dont mind:

1. I did use that account to remit my pre-residence savings to the uk, never realized I had to declare anything. Did I have to declare that account if I only had savings accrued from before my relocation? There was hardly any interest generated from it.

2. May I ask what type of mail did HMRC send to your overseas address? I changed my address from uk to home country with the bank and therefore the most up-to-date address with the bank was my home country one. I read in CRS guideline the banks are required to submit CURRENT address to the jurisdictions, so in my case my home country address will be submitted. If ever HMRC decides to send me a nudge letter, will they send it to my home country address or will they look for me based on my date of birth and name in their system, or will they think i've moved and not bother.

I appreciate your time.

 

[blueswallows]

@Martin Everson I've just read that HMRC received info of 5.6 million overseas accounts last year and is now sending nudge letters. Are you aware if there is any threshold on account balance/ interest or they just send it to everyone.

 

[Martin Everson]

1. I did use that account to remit my pre-residence savings to the uk, never realized I had to declare anything. Did I have to declare that account if I only had savings accrued from before my relocation? There was hardly any interest generated from it.

All money you had before you relocated to UK is considered capital. Anything you did with remittance before official residency does not matter.

May I ask what type of mail did HMRC send to your overseas address?

Failure to file a tax return with 100's of £££ in penalty. It was an error on HMRC side so I called HMRC hotline and cleared it all up. As long as you do this in same tax year they cancel all charges . The concerning factor is they sent it to an address that I have never given them which spooked me the hell out.

I read in CRS guideline the banks are required to submit CURRENT address to the jurisdictions, so in my case my home country address will be submitted.

The banks sends data to your home country tax authority who are required to send to ALL locations where you were resident during the year. You can't i.e be living in Germany and then switch your address to Dubai and expect only reporting to go only to Dubai. It doesn't work like that with CRS.

If ever HMRC decides to send me a nudge letter, will they send it to my home country address or will they look for me based on my date of birth and name in their system, or will they think i've moved and not bother.

You seem really concerned as a non-dom about HMRC or your not telling the full story . Whats wrong with HMRC getting your overseas data on your account, unless you have been remitting money more than you stated and failed to declare it. In any case the data HMRC will get from your home country will not reveal if this took place anyway.

I've just read that HMRC received info of 5.6 million overseas accounts last year and is now sending nudge letters. Are you aware if there is any threshold on account balance/ interest or they just send it to everyone.

Have a read of the below.
https://www.gov.uk/tax-foreign-income/non-domiciled-residents
btw do you have an accountant in UK? Seems odd that as a UK RND the very basics and thresholds etc you don't know yet . Get one quickly as RND status in UK is complex. You will need to understand how income, interest, clean capital, dirty capital, capital gains, mixed funds etc are treated as a RND. Trust me you need to separate this all out properly if you want to remit the money to UK and get favourable tax treatment i.e income vs capital gains rate etc.

P.S Have you filed a tax return before and have you elected to be on the remittence basis ?

 

[blueswallows]

@Martin Everson Thanks a lot for your answers. You're right I am completely clueless when it comes to finances, capital etc. where I came from has a very simple system so this is all a bit stressful. Hopefully not too late to educate myself now.
I got paid via PAYE for a while but never filed any tax return. I have been living on pre-residence capital which was remitted here regularly AFTER my arrival (as the pound was fluctuating so much I wanted to keep my capital back home and changed to pounds when the rate was right) - am I in trouble? I did declare my savings to the home office prior to getting my visa.

From your experience do you consider UK a hostile environment in terms of taxation? (the immigration bit already took me a lot of time and resources to get through) I am in two minds about whether to stay long term or return home.

Thank you again.

 

[blueswallows]

Reasons why I'm concerned : 1. I have not worked very much here hence never paid tax 2. My pre-residence capital was sitting in my home country accounts all the time including during the CRS reported year but it was remitted here before the end of the calendar year 3. I'm due to renew my visa in the near future and worry that hmrc will see that I have not worked much here and have been remitting savings from abroad, which might cause trouble to my visa renewal As an immigrant I'm in constant worry of being kicked out even though I fulfil all the requirements.

 

[myhand]

Would consulting a local tax attorney not be the best choice for you in order to get peace in mind?

 

[blueswallows]

Would consulting a local tax attorney not be the best choice for you in order to get peace in mind?

I have heard horror stories of people being offered incorrect advice by the "professionals", I also had bad experience back at home. I should perhaps reconsider. Sorry for turning this thread into a personal story

 

[Martin Everson]

I got paid via PAYE for a while but never filed any tax return.

If you have been in UK one year and not filed a tax return then right now you are NOT a resident non-domicile. Resident non-domicile status is given as part of your tax return. Hence you have to elect to be a non-dom for the tax year in your tax return. You see each year you can elect to be taxed on a remittance basis (non-dom) or arising basis (normal world wide tax basis wihtout non-dom status).

I have been living on pre-residence capital which was remitted here regularly AFTER my arrival (as the pound was fluctuating so much I wanted to keep my capital back home and changed to pounds when the rate was right) - am I in trouble?

Ok so the money you remitted is considered "clean capital". This capital can be brought into UK without triggering any income tax. As long as this capital you brought in was not been mixed with income or gains (ie become "dirty capital") from after you were resident then your good to go.

From your experience do you consider UK a hostile environment in terms of taxation? (the immigration bit already took me a lot of time and resources to get through) I am in two minds about whether to stay long term or return home.

Do not wait for HMRC to come to you with a fine and ask why you have not filed a tax return in regards to declaring your offshore account. They will give you a penalty. You need to file a tax return now and elect to be a resident non-dom as right now you are NOT a resident non-domicile unless you got an advance ruling as part of residency with HMRC. Find specialist RND accountant and get this done asap. There are no penalities if you discover the oversight before HMRC does . Otherwise I can tell you from experience they will nail you to a cross and bat your balls around with a spiked bat for fun. You can't tell HMRC you didn't know .

I have heard horror stories of people being offered incorrect advice by the "professionals", I also had bad experience back at home. I should perhaps reconsider. Sorry for turning this thread into a personal story

Once you get an accountant you are fine. Yes this happens to every non-dom. Horror of horrors was when a client came to me once and I found out he remitted £1,200,000 to buy a flat in London. He did this from his offshore "dirty capital" rather than "clean capital" and I had to let him know the bad news that he will have a huge tax bill for that simple mistake.

If you have not yet been in UK a year and not yet needed to file a tax return bottom line is you have no tax liability other than a late filing fine of £100 plus £10 for every day you delay filing the return etc. The real calculation works out at roughly £1,600 a year. If however you have been in UK well over one tax year then currently you are going to be taxed on an arising tax basis. Bottom line is no tax is due from you as there is no tax on capital in UK - remitted or not remitted, RND or non-RND.

 

[andrewdb]

If you have been in UK one year and not filed a tax return then right now you are NOT a resident non-domicile. Resident non-domicile status is given as part of your tax return. Hence you have to elect to be a non-dom for the tax year in your tax return. You see each year you can elect to be taxed on a remittance basis (non-dom) or arising basis (normal world wide tax basis wihtout non-dom status).



Ok so the money you remitted is considered "clean capital". This capital can be brought into UK without triggering any income tax. As long as this capital you brought in was not been mixed with income or gains (ie become "dirty capital") from after you were resident then your good to go.



Do not wait for HMRC to come to you with a fine and ask why you have not filed a tax return in regards to declaring your offshore account. They will give you a penalty. You need to file a tax return now and elect to be a resident non-dom as right now you are NOT a resident non-domicile unless you got an advance ruling as part of residency with HMRC. Find specialist RND accountant and get this done asap. There are no penalities if you discover the oversight before HMRC does . Otherwise I can tell you from experience they will nail you to a cross and bat your balls around with a spiked bat for fun. You can't tell HMRC you didn't know .



Once you get an accountant you are fine. Yes this happens to every non-dom. Horror of horrors was when a client came to me once and I found out he remitted £1,200,000 to buy a flat in London. He did this from his offshore "dirty capital" rather than "clean capital" and I had to let him know the bad news that he will have a huge tax bill for that simple mistake.

If you have not yet been in UK a year and not yet needed to file a tax return bottom line is you have no tax liability other than a late filing fine of £100 plus £10 for every day you delay filing the return etc. The real calculation works out at roughly £1,600 a year. If however you have been in UK well over one tax year then currently you are going to be taxed on an arising tax basis. Bottom line is no tax is due from you as there is no tax on capital in UK - remitted or not remitted, RND or non-RND.

thanks martin!!!

 

[blueswallows]

Thanks folks, still a bit confused.
I've been in the uk for a couple of years so I'm a resident.
Do I need to file a tax return simply because I remit clean capital here? what is there to file?
Is it a must for every immigrant to file such return after a year of their arrival?
Is it a must to inform HMRC of any foreign account even when there is no foreign income/gain/ self employment? (The interest generated from my capital had been less than GBP1 per year.)
Will hmrc find it problematic seeing I had a foreign account with GBP60 in it and never declared it?

I am worried now!

 

[blueswallows]

@andrewdb out of interest how would hmrc find out about your client's mixed capital? was it because he had to prove source of funds during the purchase? or because he had to declare his foreign gains during self assessment subsequently?

 

[blueswallows]

Sorry to clarify my question, do I need to file a tax return and elect to be RND to be able to remit clean capital over?

 

[Martin Everson]

Sorry to clarify my question, do I need to file a tax return and elect to be RND to be able to remit clean capital over?

You need to file a tax return to claim the RND status or get an advance ruling (HMWI are only people that really do this). Right now you are NOT an RND. I repeat you are NOT an RND and have NEVER been as you have NOT claimed this status yet. Remittance basis status is NOT automatic.

You need to complete form SA109 and answer question 28 (Box 28) to claim RND status:

https://www.gov.uk/government/publications/self-assessment-residence-remittance-basis-etc-sa109
You also need to file a standard tax return SA100 and answer question 8.

https://www.gov.uk/government/publications/self-assessment-tax-return-sa100
If you have not done any of this then you are considered to be under the arising method of taxation. Meaning you pay tax on your world wide income like everyone else. RND status is a special status that you MUST claim EACH year.

I've been in the uk for a couple of years so I'm a resident.

Well foreign accountant information exchanged now will put you on HMRC's radar very soon. They will see you have never filed a tax return in years. All they will see from CRS is you had money abroad and will ask you for more info on it. Right now all your income abroad is taxable (if any) as your not an RND. The penalty alone for not filing will be in the £0000's for your right now. You can naturally appeal those fines but you must pay and ask questions later.

RND status is complex and is not joke. There are accountants and banks in Switzerland, Guernsey and Jersey etc that have specialist departments serving just UK RND's as it requires special understanding around seperation of capital, income, remittance etc. I wouldnt keep offshore money in any other bank that does not offer this service as an RND. For example I used UBS for this.

https://www.ubs.com/uk/en/wealth-ma...aging-your-resident-non-domiciled-wealth.html
Do yourself a favour and get a good accountant as right now your not an RND

 

[blueswallows]

@Martin Everson Am I understanding this correctly - if I choose to be taxed on worldwide income rather than RND (since I have close to 0 amount of interest, and personal allowance of interest income is GBP1000 per year), I can remit my capital to uk without having to declare it?

 

[blueswallows]

According to the logic, a normal UK resident (domiciled), for example if he makes GBP10 amount of bank interest from his UK bank last year, he will then need to file self assessment even though he has no other income. How is this admin work sensible?

Sad to say but this country seems to be poverty-stricken and more totalitarian than a communist country, no wonder all the rich people have fled.

 

[Martin Everson]

There is no tax on capital in UK whether it is held abroad or locally or remitted from abroad to UK. As long as it is not income or capital gains you are good. Otherwise logically every time money crosses into UK it will be taxed which makes no sense......lol.

You can check here if you need to file a tax return it is very easy test:

https://www.gov.uk/check-if-you-need-tax-return