Tax ruling set to hit foreign executives working here

Thousands of wealthy individuals could pay extra tax after a second front opened up in the battle by Revenue and Customs to recover millions of pounds.

Senior executives who come to work in London believing they will not pay tax for the first three years have been warned they could be hit by a tax tribunal ruling.

It stated that Andreas Tuczka, an Austrian corporate financier based in London, was an "ordinary resident" for the first two and half years here — despite the fact that his intention had been to return home — and therefore liable for tax on his worldwide earnings, rather than just those in Britain.

Accountants had previously followed Revenue guidance that overseas residents working here temporarily only paid tax on their full income after three years.

Lawyers have pointed to the case of Robert Gaines-Cooper, a Seychelles-based entrepreneur told he will have to pay £30 million in back tax despite spending less than 91 days a year in the UK.

The Court of Appeal accepted the Revenue's argument he was liable because England was centre of his interests.