High-profile Scots such as Monaco-based former racing driver David Coulthard, now a BBC TV motor-racing pundit, entrepreneur Jim McColl, and Bahamas-domiciled Sir Sean Connery could see the time permitted in the UK without paying tax cut from 183 days a year to just 10.
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Other figures who face stiff tax bills if they overstay their time in their home country include Sir Mick Jagger of the Rolling Stones and Jersey-based Paul Green, the property multimillionaire who is behind the Silverburn shopping complex in Glasgow.
In a consultation about to be published, HM Revenue & Customs (HMRC) is proposing to dramatically cut the “residency test” , according to leading Scots law firm McGrigors.
At present, anyone who spends less than 183 days in the UK in one tax year – or less than 91 days on average over a four-year period – is generally considered non-resident, and escapes the UK tax net.
Under the new proposals, individuals would only need to be living or working in the UK for 10 days before being classed as resident and subject to UK tax rules.
Jim McColl, a member of the Scottish Government’s economic council who has been heavily involved in regeneration and employment projects in Glasgow, and was lauded as the rescuer of more than 500 jobs at the former Weir Pumps in Glasgow, is based in Monaco.
Two years ago, in response to an attack by the LibDems’ Vince Cable on his tax status, Mr McColl said he was “currently based abroad” but “remained passionate about working for a strong future for Scotland”.
Yesterday, Mr McColl said of the proposal: “I am here to try to create wealth. If that is restricted, it will restrict the wealth that is created. I don’t think it’s a good idea.”
David Watt, executive director of the Institute of Directors in Scotland, said: “I would be very alarmed if this were to happen. It is not such a massive issue for Scotland as it is for central London but it is still a significant issue at a time when politicians seem to be every day suggesting additional tax for anybody who has got any money.”
In May 2010, Lord Laidlaw of Rothiemay, the Monaco-based tax exile who for many years single-handedly bankrolled the Scottish Conservatives, became the first life peer to give up his seat in the House of Lords. It followed new legislation requiring members of both houses of Parliament be UK residents for tax purposes.
Along with four other peers including former Tory party treasurer Lord McAlpine, Lord Laidlaw retained his title as the new law only covers membership of the upper chamber.
Lord Ashcroft, the former Conservative Party chairman, and big Labour donor Lord Paul both pledged at the time that they would become UK taxpayers.
Jason Collins, partner at McGrigors, said: “If it is a hard and fast rule, it would catch huge numbers of people who reside abroad and only fleetingly visit the UK for work. It would effectively bring large numbers of non-resident taxpayers into the tax net and significantly increase the tax take.”
Mr Collins said the 183-day rule exists largely as a convention and has no statutory force, adding: “In recent years HMRC had begun to interpret the rule very loosely and started looking much more closely at what taxpayers are doing while physically in the UK – such as maintaining business and social links.”
HMRC was unable to comment on the proposals and referred The Herald’s inquiries to the Treasury last night. It declined to provide a response.