This is what has got them all so worried.......
Taxman to swoop on non-dom’s daily grind
By Jean Eaglesham and Vanessa Houlder in London
Published: February 19 2008 22:03 | Last updated: February 19 2008 22:03
Business travellers tempted to grab a quick coffee with a contact between flights should beware the tax inspector if they are among the thousands who enjoy the benefits of not being classed as a UK resident.
From April, HM Revenue & Customs will extend its remit to airport lounges as part of a series of tax reforms that include the contentious clampdown on non-domiciled residents.
When draft legislation for the new measures was published in January, the government initially said the days people spent travelling in and out of the UK would count towards the 91 days that qualify visitors as UK residents, making them liable for UK tax unless travellers stayed “airside” in parts of the airport not accessible to non-travellers.
However, after business lobbyists claimed the measure was too harsh, the Revenue came up with a partial reprieve. HMRC officials told tax advisers in meetings last week that anyone simply in transit through the UK would not have that day counted towards the 91-day tally, even if they left one airport and traveled to catch a plane at another.
But there is a sting in the tail. The Revenue says the reprieve will apply only if no work is done in the UK on the day in question.
“The example they give is of someone landing at Heathrow and then fitting in a meeting before catching a later flight from Gatwick,” said Andrew Tailby-Faulkes, a partner at Ernst & Young. But, he says: “What if you have a quick meeting with a colleague in Starbucks? Does sending e-mails from a laptop breach the new guidelines? And how will the rule be policed effectively?”
A Treasury spokesman said: “We are aware of the potential issues for some transit passengers and are considering this as part of the consultation.”
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The short answer is that the days of the financial adviser leaving the Channel Islands for the England on a Monday morning and returning on a Wednesday evening and logging the three days in the UK as one day are over. It remains to be seen what this does to the business passenger figures on Aurigny and anyone else operating a schedule between the Channel Islands and the UK.
One thing is for certain though and that is that the burden of proof will be upon the executive to prove that he did not conduct any form of business during his transit through the UK. Given that HMRC now have almost unlimited powers to tap into electronic correspondence and telephone lines, silence during transit is going to be the watchword.
