By Shane McGinley
Move may affect Britons who have not declared earnings on their overseas property holdings
The UK has set up a new unit to target British investors who own property in the Middle East, in a bid to boost the country’s flagging tax revenues.
The UK government has set up a 200-member team of taxation investigators, known as the ‘affluent unit’, which will target those who own properties overseas and have not declared them for tax purposes.
During the boom era, thousands of British investors bought holiday homes and investment properties, mainly in Dubai and Egypt.
There will be "no hiding place" for tax cheats, said David Gauke, the UK’s chief secretary to the Treasury who is heading up the new unit. The UK government “is committed to tackling tax evasion and avoidance across all areas of the economy,” he added.
The new unit will specifically target those who are paying the top tax rate of 50 percent but also aims to investigate UK-based commodity traders and British residents who hold offshore investment accounts.
Ronnie Ludwig, tax partner at accountancy group Saffery Champness told the OPP property trade magazine that “those who have been letting out their foreign property and declaring the rents received have nothing to fear, but those who own foreign property which has never been let out should be prepared to prove to HMRC [Her Majesty’s Revenue & Customs] that they have received no income from the property.”
“This will involve producing UK and foreign bank statements and being able to demonstrate that they could afford to purchase and maintain the property out of normal declared sources," he added.
Charles Neil, CEO of Dubai-based Landmark Properties said the new unit “will have no effect on British expatriates living and working in Dubai who have non-resident UK status for tax-purposes,” but he warned that any UK residents who own Dubai properties and have not declared them any income from them should “take appropriate legal advice from their lawyers and tax accountants on how they are to approach the tax authorities and pay what is due.”
Neil pointed out it might be difficult for UK officials to track down those who own properties in Dubai as the Land Registry is not searchable. It would be difficult for UK authorities to apply to the Dubai Courts to get an order for ownership details to be handed over, he added.
“There is no income tax in Dubai, and technically if you are not paying tax back in your home country you are not breaking any laws in the UAE,” said Neil.
Tom Bunker, investment sales consultant at Dubai-based real estate agency, said this was unlikely to be the last such initiative and other European and international governments were likely to follow suit.
“I suspect that we are going to see more and more countries impose similar tax rules in the future in an attempt to shore up their balance sheets.
"People are still going to invest money, but they may have to become a bit more creative in doing so. As governments come up with multitudes of new tax rules, investors come up with a multitude of ways to avoid them. Only time will tell what kind of effect this will have on their investment practices,” Bunker added.
So then I guess they will rely on people to give anonymous tips on friends or family they know, whom own property here. A good way to get back at someone. Pretty soon, they'll have a snitch line.
David Beckham got his villa on Palm Island for FREE years ago!
Will he finally pay tax now, or will his parents be held liable as they occupy it?