It's been a long and complicated affair but my client lived in Sweden up until 2006. He then moved to England and the Swedish Tax Authorities have issued a tax demand for 2009. He appealed at the time but bungled by appealing on the wrong grounds. He is neither Swedish or English which didn't help.
I got involved last year as his bookkeeper because the Swedish Tax Office had passed it on HMRC to collect. I managed to get HMRC to put a hold on collection for a while and I have provided Sweden with proof that he was resident in England at the time (Lease agreement/Housing Benefit claims over the whole year bar one month) but Have just had word back Sweden are sticking with their original decision, and that it can't be appealed to a higher court. They originally rejected the lease agreement as it was dated 2007 and couldn't apply to 2009, despite the fact that he still lives at the same address, and housing benefits were paid during the period. I re-iterated the facts again and basically its been rejected.
I think I already know the answer but have we exhausted all avenues?
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Is the amount involved material? If so then the client should use someone like KPMG or PWC who have international presence to get this resolved as tax authorities are alwaysd wary of going up against the big boys.
If the amount iss not material then how much do your fee's need to be before the client would have been better off paying the demand and being able to sleep at night.
If the client is adamant about the challenge then I would be looking to ensure that he was really telling me the truth (and all of the truth, and nothing but the truth) about where he was for the entirety of 2009 plus whether he had any residual interests / accomodation / bank accounts in Sweden that he is not telling you about.
Residency tests are a bit complex and simply because one is domiciled in a country does not necessarily follow that they are resident there. i.e. how many days was the client actually physically in the UK (not just not in Sweden) in 2007, 2008 and 2009... Did he in any year spend 30 days or more in an overseas home? Where was he working? What were his sources of income? Did he maintain a Swedish Bank Account? Was the client taxed under UK taxation?
Where clients flit between countries on occassion they forget facts which can be key.
This isn't an area that I'm an expert in but I've read enough around the double taxation rules to realise that common sense about where someone is physically located plays only a small part in the determination of tax residency.
Is the materialarity question begining to sound a tempting option yet!
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Hi John
So I am assuming his lease agreement ran out at end of 2007 and he lived in the property but didnt extend the actual legal document? The problem you have is that one month!! Well in fact all he would have to do is go there for a weekend and earn money so it runs deeper than that.
Did he have any Swedish income up to 2009 even though he wasnt living there? They seem to tax anything that moves (although they have good schemes for UK expats moving there I believe!).
My understanding is that the Swedish tax decisions can be appealed via the County Administrators Court and then The County Administrators Court of Appeal, so Im not sure how far up the food chain your appeal got.
I would suggest getting a specialist foreign tax advisor to take a look at where its got to and what has been sent. One with specific knowledge in Nordic countries. It may just need some additional information to prove beyond doubt that he wasnt anywhere near Sweden and earning NOTHING there to get the case settled
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
may have crossed but I was first (for once, normally have to get up pretty early to beat your lightning fingers Joanne)
yep, I think that our two posts compliment rather than disagree with each other.
My go to response for issues such as this is KPMG who can put the fear of god into tax authorities world wide but they don't come cheap which is why I was enquiring about materialarity of the sums involved.
The client here could quickly find their tax bill dwarfed by their accountants bill!
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
may have crossed but I was first (for once, normally have to get up pretty early to beat your lightning fingers Joanne) ONLY, yes ONLY, cos I had to take a call mid typing the response. lol
yep, I think that our two posts compliment rather than disagree with each other.
My go to response for issues such as this is KPMG who can put the fear of god into tax authorities world wide but they don't come cheap which is why I was enquiring about materialarity of the sums involved.
The client here could quickly find their tax bill dwarfed by their accountants bill! Oh absolutely. Might just be a case of put up and shut up and pay the damned bill. Especially when you start to shine the light in his eyes to get the truth, whole truth and the rest
Been an interesting day of 'tax' enquiries, even with the business owners wandering in to BKN by mistake.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
We're talking a few thou, so probably not enough to get KPMG involved lol. I've gone as far as I can on it myself, I just found it frustrating that the main reason for rejection was the lease not covering 2009 and when I pointed out how leases work in this country, them refusing to look at it again. It looked fairly black and white to me but have noted the comments, The missing month was to his country of birth and they already checked that.
I will pass the info on about involving a nordic tax adviser, perhaps in hindsight that should have been his route forward, think he buried is head in the sand when he lost the first appeal to the administrative court, until the tax demand from HMRC landed on his doormat last year.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
(for once, normally have to get up pretty early to beat your lightning fingers Joanne)
