Why a pet in Paris could be the perfect tax dodge

Holly Watt and Robert Winnett

http://property.timesonline.co.uk/tol/life_and_style/
property/overseas/article1596764.ece

AFTER Turkish lira, oriental rugs and gold bars, the latest dodge for the wealthy seeking to avoid paying tax is to buy a pet abroad.

HSBC, Britain’s biggest bank, hosted a seminar in London last week at which millionaires were advised that keeping a pet at an overseas property is one of the best ways for them to convince tax inspectors that they do not live in the UK.

It coincides with a boom in the number of Britons claiming that they are “nonresident” in this country for tax purposes. According to HM Revenue & Customs, the number has quadrupled from 33,000 to 135,000 over the past four years.

There has also been a sharp rise over the same period in the number of so-called “nondom residents” – those born abroad who are now living in Britain – from 65,000 to 112,000.

HSBC, in conjunction with Baker & McKenzie, the multi-national legal firm, hosted the private seminar at the Hyatt Regency, a five-star London hotel, to advise the wealthy on how to avoid a clampdown by the authorities.

It was during this seminar, attended by a Sunday Times reporter, that the unconventional advice about buying a pet was dispensed.

According to the advisers, the key for the wealthy Britons was to convince the Revenue that they had roots in another country.

A lawyer from Baker & McKenzie said: “It’s a very good thing if you’ve got pets there [abroad]. The Revenue gets the [right] impression.”

The advisers said that the residency rules were “all a bit floaty” and that those who understood the system could now treat Britain as “probably better than Switzerland”.

However, the millionaires at the seminar were warned that the Revenue was becoming more aggressive, conducting monthly meetings with their counterparts in America, Europe and the Far East to discuss the tax affairs of various individuals.

The millionaires were also advised to switch banks and accounts every year. “Ideally be at different banks or different branches; make sure terms of accounts are a bit different,” said the adviser from Baker & McKenzie.

The adviser said: “That offshore account the Revenue was not aware of, the Revenue is now aware of.” Another adviser added: “An account in Switzerland really won’t work any more.”

According to a document circulated by HSBC at the meeting: “More and more Britons have been seeking to become nonUK resident for tax purposes as the tax burden in the UK increases.”

Other accountants and private banks claim that the Revenue is becoming particularly aggressive in its approach to policing the growing number of tax exiles – who are allowed to spend only 90 nights in Britain if they are to escape paying tax.

Yesterday a spokesman for HSBC defended the advice given at the seminar.

“As you expect, HSBC advises its customers to remain both within the spirit and the letter of the law with regards to their financial dealings and I’m sure that our colleagues at Baker & McKenzie do the same,” the spokesman said.