Case study

Assessing tax liabilities for UK-resident non-UK domiciliary

Gateley Legal

We have been advising a UHNW billionaire client for several years and working with them to make improvements to their global wealth structure.

The offshore fiduciary running the structure made an innocuous proposal to consolidate various payments within the structure. Thankfully, the client sought our opinion before doing so.  

How did we help?

At first glance, the tax analysis seemed pretty straightforward as the transactions had absolutely no connection to the UK.  However, after detailed scrutiny of the tax legislation, we found a glitch.  We discovered that there was a high risk that the proposed actions of the fiduciaries would likely have triggered this tax liability.

We averted the risk of a nine-figure catastrophic tax liability for a foreign domiciled client resident in the UK. 

Based on the analysis we were able to propose an alternative solution to the fiduciaries which removed the risks associated with what they had proposed.

How did this benefit the client?

This was a highly esoteric tax point which, we believe, has never previously been considered either by HMRC or by tax practitioners in the UK.  The issue is not covered in any of the leading textbooks on taxation, nor in the HMRC manuals.  The issue involved an analysis of the interaction between what constitutes a “remittance” under UK tax legislation and the place of enforcement proceedings under international law.  We took the issue to the person we believe to be the smartest tax QC in the UK for an opinion and our analysis was confirmed.

Further guidance

It is essential that professional advisers work closely together to understand the implications of making changes to global wealth structures. We regularly work with fiduciaries to ensure that proposed changes – however seemingly straight forward and innocuous – do not have significant tax implications for their client. If you are an adviser working with a client on such a change, or have been suggested to make such a change by your advisers, and would like an expert team to analyse the implications, please do get in touch with our experts listed below.

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