HMRC Can’t Chase Expats Overseas, Says Judge


Expats can snub tax inquiries from HM Revenue and Customs without worrying about any comeback or penalties following a landmark court ruling.

HMRC has always maintained that expats could be called on to provide any information or document reasonably required during a tax inquiry.

But the High Court in London has ruled against this view.

The case arose when Michael Jiminez contested the HMRC claim and argues that a Schedule 36 Notice relied on to request tax information was only valid within the UK.

Mr Jiminez left the UK in 2002 and moved to Cyprus and then Dubai.

High Court clips HMRC reach

HMRC pursued him over tax matters until 2012, when a Schedule 36 Notice was issued concerning a nine-year time slot when he had been an expat.

Jiminez demanded a judicial review of HMRC’s powers to request information from him as a non-resident arguing the tax authority could only do so if he was resident in the UK.

The High Court agreed with his argument and told HMRC that if they wished to ask questions of non-residents, they could only do so if the UK has a reciprocal tax co-operation agreement with the country where they now lived.

“Schedule 36 does not provide a power to give the taxpayer notice that was given to the claimant in Dubai and so the revenue should not have given it. The taxpayer notice given to him was not lawfully given and should be quashed,” said Mr Justice Charles.

Both Cyprus and Dubai have such agreements.

Schedule 36 Notices not valid overseas

The High Court ruling is binding on all current HMRC Schedule 36 inquiries with non-residents and can only be overturned on appeal.

Expats should feel free to ignore any Schedule 36 Notices and should refer the tax inspector to the case Jimenez v HM Revenue & Customs and Other [2017] EWHC 2585.

They should also appeal any non-compliance penalties as the notice was issued unlawfully.

Mr Jiminez is the former owner of Charlton Athletic Football Club.

“For a long time HMRC have held the view that distance was no object to their powers meaning any expats outside of the UK were in their sights long after they had left the country,” he said.

“Young or old, rich or poor, retired or not or simply wanting to move to warmer climates and having made the decision to no longer be a resident of the UK, made no difference the attitude that HMRC adopted towards these expats. This ruling shows that this is fundamentally not the case and that HMRC’s powers actually stop at the UK border.”

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