Lord Sugar falls foul of little-known residence rule
Lord Alan Sugar has found himself in the spotlight after he alleged his accountant gave him incorrect advice in respect of his tax residence. What went wrong?
Tax residence has been on a statutory footing since 2013, so it's usually easy to determine someone’s residence as long as they have kept accurate records of their visits to the UK, working patterns, and so on. It's possible to remove or restrict one’s exposure to UK taxes by becoming non-resident, and this is a popular choice for people that look to retire overseas. This is generally uncontroversial, and cases where the plans fail tend to centre on the individual subsequently spending too much time in the UK. However, in Lord Sugar’s case there is no suggestion this happened.
Lord Sugar had relocated to Australia. Some time after this, he received a large dividend from a UK company. In general, UK income is still subject to UK income tax for non-residents, but the “disregarded income” rules mean that it’s possible to elect for the tax to be restricted to that deducted at source, i.e. £nil, in exchange for a loss of personal allowances and any double tax relief. On paper, this would appear to work. The problem is that MPs and peers are automatically deemed "resident, ordinarily resident and domiciled in the UK for the purposes of income tax, inheritance tax and capital gains tax”. The dividend was taxable in full, and Lord Sugar promptly paid the estimated £186 million.
Related Topics
-
HMRC takes aim at side hustles
People with side hustles are the target of a HMRC press release reminding them of their potential tax obligations. Why has this been published now, and what are the key points to remember?
-
Can sale with no goodwill charge still qualify as TOGC?
You are selling an unprofitable part of your business but the sale does not include any charge for goodwill due to trading losses. Can the sale still qualify as the transfer of a going concern and what conditions must you meet?
-
VAT on electricity to be cut
The new Prime Minister has announced a cut to the rate of VAT on electricity from 1 October. What's the full story?







This website uses both its own and third-party cookies to analyze our services and navigation on our website in order to improve its contents (analytical purposes: measure visits and sources of web traffic). The legal basis is the consent of the user, except in the case of basic cookies, which are essential to navigate this website.