HMRC can demand expats to reveal details of their tax affairs even if they are living in another country, a court has ruled.
The UK Court of Appeal has ruled that HM Revenue & Customs can send a notice demanding financial information to a former UK resident living in Dubai. Lawyers confirm the move is a recent trend for UK courts to back official agencies wanting to extend their powers overseas.
The former co-owner of Charlton Athletic Football Club will have to reveal details of his tax affairs to HMRC. Tony Jimenez, who has also been a vice-president at Newcastle United, claimed a request for information was invalid because he lived in Dubai.
The court’s interpretation of HMRC’s powers as having ‘the widest territorial reach that is consistent with international law’ and adoption of the sufficient connection test may lead to other UK authorities testing the limits of their statutory information-gathering powers"
A judicial review quashed the original request, but HMRC launched an appeal. It has now won, with Lord Justice Leggatt rejecting the idea the notice "offends the sovereignty" of a state.
The court agreed HMRC had jurisdiction over Jimenez because he had an identifiable relationship with the UK as he had once lived here and was liable to pay tax.
"The question of extra-territorial effect is likely to depend upon close examination of the interaction between any relevant principle of international law which would operate against giving the domestic legislation process some extra-territorial effect and the public interest considerations which favour a construction that involves the power being exercised in relation to persons outside the jurisdiction," said the court.
HM Revenue & Customs had asked Jimenez to reveal his bank and credit card accounts since 6 April 2004, and provide a list of his visits to the UK between that date and 5 April 2013.
It also made a request "about the use of chauffeurs when visiting the UK", the High Court heard in October 2017.
"The court's interpretation of HMRC's powers as having ‘the widest territorial reach that is consistent with international law' and adoption of the sufficient connection test may lead to other UK authorities testing the limits of their statutory information-gathering powers," said legal bloggers Dominic Stuttaford and Andrew Reeves of law firm Norton Rose Fulbright.
This has been the case for some time in tax matters, as HMRC has been given ever-increasing powers to have access to information and documents held overseas.
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