Stung by HMRC - living outside UK now

[hmrcvictim]

Hi,

I received letter by post from HMRC yesterday. I am a naturalised British citizen but I am now living outside UK - in US. When I left UK, and also when I filed my SATR last year, I provided my US address. So, I am not surprised that they sent me the letter to my US address.

Letter mentioned Loan charge but didn't mention a year. I did not know of End of May and End of September deadlines because I was busy with job and family in US. I only learnt about this, when I received the post from HMRC yesterday.

When I came to UK in 2010, and started contracting, starting a limited company was an overwhelming thought as someone new to country. So, I did what one of my friends resident in UK for long time was doing. In March, 2010 I started working with e-cover. I believe it was a long term loan arrangement and they mentioned it was legal. Probably it was legal at the time and I did not think HMRC or any govt. body in general, would be so unfair to change the rules of the game, after the game was over.

Anyway, 4 months later, around July 2010 - I came to know that even though it is legal (at the time) scheme, HMRC doesn't like it and so I terminated my arrangement after total 5 invoices. From September 2010 onwards, I started contracting through limited company.

This is about 8+ years ago now and I have changed countries. Only documents I have are bank statements. I calculated loan payments I received during those 5 months. It is about £26,000. Given the fact that, I am now residing outside UK, my income from UK is only rental income and doesn't exceed £10,000 a year.

So, I am wondering:
- If I should contact HMRC immediately and settle / pay up or should wait till April 2019 and pay loan charge.
- Should I go through tax advisor? and if someone can recommend one based on personal experience.
- Given that my UK income is now very low, probably loan charge is better for me ? I am thinking that I will be paying 20% tax instead of 40%.

Thanks,
<Name withheld as HMRC may as well be doing "market research" knowing how desperate they are>

[passerby]

The issue with the LC charge is it might raise liability in the US as they tax you on your worldwide income. (you will probably get credit for tax paid in the UK though). No one knows yet how the LC will be reported to other tax authorities as far as I know.

Talk to an advisor, both WTT and Phil will talk for free for an initial assessment.

[hmrcvictim]

UK doesn't levy world wide income tax. right?

The issue with the LC charge is it might raise liability in the US as they tax you on your worldwide income. (you will probably get credit for tax paid in the UK though). No one knows yet how the LC will be reported to other tax authorities as far as I know.

Talk to an advisor, both WTT and Phil will talk for free for an initial assessment.

[hmrcvictim]

I see your point now.

If LC is considered as 2018-19 income, and in the absence of significant UK based income, if I pay 20% tax as I am hoping to, as US levies worldwide income tax, under double taxation treaty between UK/US , I will end up paying higher of UK and US tax. So, I am not really benifitting much. Might as well settle.

Curious to know experts' viewpoints.

Thanks

The issue with the LC charge is it might raise liability in the US as they tax you on your worldwide income. (you will probably get credit for tax paid in the UK though). No one knows yet how the LC will be reported to other tax authorities as far as I know.

Talk to an advisor, both WTT and Phil will talk for free for an initial assessment.

[hmrcvictim]

Webberg , phil@dswtres

Appreciate your views on this.

Please also PM me your details.

Thanks!