CJEU Trust Freezing Decision: Asset Protection Depends on Giving Up Control

Asset protection trusts are often discussed as though the critical question is where the trust is established. In practice, jurisdiction is only part of the answer. Bermuda, Jersey, Guernsey, Cayman, New Zealand, Liechtenstein or any other trust jurisdiction may be relevant, but the more important question is usually whether the settlor has genuinely given up control.

That point has been illustrated again by recent judgments of the Court of Justice of the European Union on the freezing of assets held through trusts in the context of EU sanctions against Russia

(https://curia.europa.eu/site/upload/docs/application/pdf/2026-05/cp260073en.pdf , https://infocuria.curia.europa.eu/tabs/document/C/2023/C-0483-23-00000000RP-01-P-01/ARRET/321067-EN-1-html ; https://infocuria.curia.europa.eu/tabs/document/C/2023/C-0483-23-00000000RP-01-P-01/CONCL/302387-EN-1-html ; https://infocuria.curia.europa.eu/tabs/document/C/2024/C-0428-24-00000000RP-01-P-01/ARRET/321069-EN-1-html).

The cases concerned assets linked indirectly, through trust structures, to persons subject to EU restrictive measures adopted following Russia’s invasion of Ukraine. The Court was asked how Article 2 of Regulation 269/2014 applies where assets are no longer held directly by a sanctioned person, but have been placed in or held through a trust.

In the first case, C-483/23, several companies were controlled by a Bermuda company, which was itself held by a Bermuda trust. The trustee was a Swiss company. The settlor had been removed from the class of beneficiaries before being sanctioned in 2022. The Italian authorities nevertheless froze the companies and their assets, taking the view that they remained substantially attributable to the settlor.

In the second group of cases, C-428/24 and C-476/24, the Court considered the position of trust beneficiaries. One case concerned an Italian company held indirectly by a Bermuda trust. The other concerned a yacht in Italy, owned by a company controlled by a trust of which a sanctioned person was the sole beneficiary. In both cases, the trust terms apparently prohibited transfers to sanctioned persons and any form of control by them. The Italian authorities still imposed freezing measures, on the basis that the assets remained attributable in practice to the trust beneficiary.

The Court’s answer was deliberately practical. The concepts of belonging to and control in the EU asset-freezing rules are not limited to formal ownership. They can extend to de facto power over assets. The Court said that, to ensure the effectiveness of EU law, those concepts must cover all forms of power or influence exercised over the assets, even where there is no direct legal link between the assets and the sanctioned person.

That is the key point. A trust may be valid. The trustee may hold legal title. The sanctioned person may not be named as owner. He may even have been removed from the class of beneficiaries. None of that is necessarily conclusive. The question remains whether he can use, benefit from, dispose of, or influence the assets, or influence the trustee’s decisions in relation to them.

The Court also recognised that control or attribution may be inferred from the surrounding facts. Relevant indications may include the relationships between the settlor or beneficiary and other persons involved in the trust, the use of trust assets for activities intended primarily for that person, unnecessarily complex legal structures, control over the trustee, entities being created or changed shortly before sanctions, and relationships between company directors and the settlor or beneficiary.

These were sanctions cases, not tax cases and not creditor enforcement cases. The legal test is therefore specific to EU restrictive measures. But the broader lesson is familiar. Courts and authorities are increasingly prepared to look beyond formal ownership and ask who, in substance, can use, enjoy, direct or influence the assets.

The same issue arose, in a different legal context, in the English High Court decision in JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev [2017] EWHC 2426 (Ch).

Mr Sergei Pugachev, the former Russian businessman and founder of Mezhprom Bank, had established a series of New Zealand discretionary trusts. The trusts held substantial assets, but Mr Pugachev was not simply a remote settlor who had transferred property and stepped away. He was a discretionary beneficiary and also held the office of protector. The protector powers were extensive. They included powers to remove trustees, veto distributions, approve amendments, and exercise significant influence over the administration of the trusts.

The High Court analysed the trust instruments in detail and concluded that, on their true construction, Mr Pugachev had not genuinely divested himself of beneficial ownership. The trusts were described as discretionary trusts, and the assets were legally held by trustees, but the retained powers meant that Mr Pugachev remained in effective control. The court therefore treated the assets as available to meet the claims of creditors. The alternative arguments, including sham and transactions defrauding creditors under section 423 of the Insolvency Act 1986, were also considered, but the central conclusion was that the trusts failed because the settlor had retained too much control.

Pugachev was not a sanctions case. It was a creditor enforcement case involving trust construction, alleged sham arrangements, and alleged transfers intended to put assets beyond the reach of creditors. The CJEU trust cases are different: they concern whether assets held through trusts can be frozen under EU sanctions law. But the practical concern is similar. In both contexts, the court looks beyond the trust label and asks whether the person said to be separated from the assets can still use, enjoy, direct or control them. The lesson for asset protection planning is clear: a trust is at its weakest where the settlor remains the practical centre of control.

This is the point I increasingly see in practice.

As a tax adviser, my first concern with trusts is usually taxation. In a UK context, that means income tax, capital gains tax, inheritance tax, settlor-interested trust rules, transfer of assets abroad, anti-avoidance provisions, reporting obligations and the taxation of distributions. In cross-border cases, it also means considering how the trust may be treated in other jurisdictions and coordinating that analysis with local advisers.

But in recent years, I have increasingly been asked about trusts as asset protection structures. That is a different question. A trust can be coherent for tax purposes but weak for asset protection. Equally, a trust may be strong from an asset protection perspective but complex or unattractive from a tax perspective. The two analyses overlap, but they are not the same.

I find it helpful to think of asset protection trusts as sitting on a spectrum.

At one end is a trust where the settlor has genuinely transferred assets to independent trustees. The settlor does not control distributions. He does not have a unilateral power to appoint or remove trustees at will. He does not have a veto over trustee decisions. He does not direct investments in practice. The trustees take advice, keep proper records and exercise their own judgment. A letter of wishes may exist, but it is treated as a letter of wishes, not as an instruction manual.

That kind of trust may still be challenged. There may be insolvency rules, fraudulent transfer rules, matrimonial claims, forced heirship issues, tax anti-avoidance rules, disclosure obligations, sanctions issues or public policy arguments. No trust is immune from attack. But the basic architecture is at least coherent. The settlor has made a real disposition of property.

At the other end is a trust where the settlor remains heavily involved. He is a beneficiary. He is protector. He can replace trustees. He can veto distributions. He can add or remove beneficiaries. He directs investments. Trustees consult him before acting. The assets remain available for his lifestyle or business interests. Everyone understands, even if the documents do not say it openly, that the trust exists to hold assets for him while keeping them away from others.

That structure may still have legal effect for some purposes. But as an asset protection structure, it is fragile. The obvious question is what the settlor has actually given up.

Most real cases fall between those two extremes. Reserved powers are not automatically fatal. A protector can have a proper role. A settlor can express wishes. A trust can be used for family governance, succession and long-term wealth planning without requiring the settlor to disappear completely from the factual picture. But the more powers and practical influence the settlor retains, the harder it becomes to argue that the trust provides real protection.

The trust deed matters, but conduct matters just as much. If trustees are independent on paper but passive in practice, the structure is weakened. If trustee minutes simply record decisions already made by the settlor or beneficiary, the structure is weakened. If trust assets are used as personal assets, the structure is weakened. If a letter of wishes is treated as binding, the structure is weakened. Asset protection depends on administration, not just drafting.

This is also why timing matters. Asset protection planning is most defensible when it is undertaken before a dispute, claim, insolvency risk, divorce, regulatory investigation or sanctions exposure has arisen. Once a person is already under pressure, a transfer into trust will attract closer scrutiny. Courts are more likely to respect long-term family succession planning than a last-minute attempt to move assets beyond reach.

Purpose matters too. A trust established for succession, family governance, long-term preservation of wealth or protection of vulnerable beneficiaries is very different from a trust established to defeat known creditors or evade restrictions. The more coherent the purpose, and the more consistently the trust is administered in line with that purpose, the stronger the structure.

The professional literature has dealt with these issues for many years. Asset Protection Trusts, 4th edition, by Milton Grundy, John Briggs and Joseph Field (https://khpplc.co.uk/product/asset-protection-trusts/), remains a valuable reference point, even though the law and enforcement environment have continued to develop. Its continuing usefulness lies in the basic message that asset protection is not magic. It requires attention to timing, solvency, creditor prejudice, governing law, enforcement risk, taxation, retained powers and the settlor’s continuing enjoyment of the assets.

For clients, the hard point is this: asset protection involves a trade-off. A settlor cannot usually keep complete control and expect complete protection. A trust that the settlor can control at will may feel more comfortable, but it will usually be less convincing when challenged. A trust that is genuinely protective usually requires independent trusteeship, real fiduciary decision-making and acceptance that the trustees may not always do what the settlor wants.

With warm regards,

Dmitry Zapol
Partner, international tax advisor, ADIT (Affiliate)
IFS Consultants, London
(www.ifsconsultants.com, dmitry@ifsconsultants.com)

The post CJEU Trust Freezing Decision: Asset Protection Depends on Giving Up Control appeared first on IFS Consultants Ltd.

Stablecoins and the UK’s Crypto Tax Headache: Is Simplification Finally Coming?

HMRC’s recent call for evidence on the taxation of stablecoins highlights a wider problem with the UK’s crypto tax framework: the rules may be clear in principle, but they are difficult to apply in practice. For individuals, the main challenge is tracking every disposal, including crypto-to-crypto swaps and stablecoin transactions, and calculating potential Capital Gains Tax even where there may be little or no real economic gain. Responses from professional bodies such as CIOT and ICAEW suggest practical reforms, including no-gain/no-loss treatment or exemptions for certain stablecoin transactions, which could reduce unnecessary compliance burdens. HMRC has shown some willingness to listen through earlier DeFi consultations, but whether these recommendations will translate into meaningful simplification remains to be seen.
 

HMRC’s recent call for evidence (https://www.gov.uk/government/calls-for-evidence/cryptoasset-taxation-stablecoins/taxation-of-stablecoins) on the taxation of stablecoins is notable because it admits, in fairly direct terms, that the present UK tax framework may not fit the way stablecoins are actually used. The call for evidence was published on 26 March 2026 and ran until 7 May 2026. It asks whether stablecoins, which are designed to maintain a stable value by reference to another asset such as fiat currency, should continue to be taxed in the same way as other cryptoassets. HMRC says it will publish details of the government’s next steps after the call for evidence.

For individuals, the core difficulty is not that HMRC has no rules. The difficulty is that the rules are demanding in practice. HMRC’s Cryptoassets Manual (https://www.gov.uk/hmrc-internal-manuals/cryptoassets-manual) states that, in the vast majority of cases, individuals hold cryptoassets as personal investments and are liable to Capital Gains Tax when they dispose of them. Income Tax and National Insurance can also apply where cryptoassets are received from employment, mining, transaction confirmation or airdrops, and trading treatment can apply in unusual cases where the individual is carrying on a financial trade in cryptoassets.

The Capital Gains Tax rules are the main source of friction. A “disposal” is not limited to cashing out into pounds. HMRC’s manual says it includes selling tokens for money, exchanging one token for another, using tokens to pay for goods or services, and giving tokens away, except for gifts to a spouse or civil partner. Moving tokens between wallets that the same individual beneficially owns is not a disposal, but the moment a token is swapped or spent, a CGT calculation may be required.

That creates a record-keeping problem. HMRC says the onus is on the individual to keep records for each cryptoasset transaction, including the type of cryptoasset, date, whether it was bought or sold, number of units, sterling value at the date of the transaction, cumulative holdings, bank statements and wallet addresses. Many crypto transactions also need to be valued in pounds sterling, and HMRC expects reasonable care and a consistent methodology where a transaction does not already have a sterling value.

Pooling adds another layer. Tokens of the same type are generally pooled for CGT purposes, with each type of token having its own pool and pooled allowable cost. That may simplify some calculations in theory, but it still requires accurate transaction histories across exchanges, wallets, DeFi platforms and tax years.

Stablecoins expose the awkwardness of this framework. HMRC currently says stablecoins are generally treated like other cryptoassets, are not generally considered money, and can still produce gains or losses, especially where a stablecoin is denominated in a non-sterling currency. HMRC also recognises that using stablecoins as payment will usually be a CGT disposal, requiring acquisition and disposal costs to be recorded. Even with sterling-denominated stablecoins, where gains may be negligible, transactions still need to be tracked and may need to be reported if aggregate proceeds exceed £50,000.

That is the practical complaint many individual users will recognise. A person may use USDT or USDC as a holding asset between trades, not because they are seeking a separate gain on the stablecoin itself, but because it functions like a crypto-market cash balance. Under the current approach, every movement in and out of that stablecoin may still matter for CGT. CIOT’s response (https://www.tax.org.uk/ref1681) puts the point sharply: using stablecoins as an entry and exit vehicle for other cryptoassets creates an additional layer of tax complexity, including the need to calculate capital gains or losses on each transaction and keep detailed records potentially for years. CIOT also notes that high-volume automated or platform-driven transactions may be low in value but high in administrative burden.

The professional-body responses broadly support simplification, although they differ in emphasis. CIOT’s main concern is that the existing CGT framework imposes significant administrative burdens where stablecoins are used repeatedly without any real-world economic gain or loss. It suggests that a no-gain/no-loss approach may be the most practical and workable reform, reducing administrative burden and the scope for expensive mistakes. CIOT also argues that any reform should include non-sterling stablecoins, because non-sterling stablecoins currently dominate actual market use.

ICAEW similarly argues (https://www.icaew.com/-/media/corporate/files/technical/icaew-representations/2026/icaew-rep-033-26-taxation-of-stablecoins.ashx) that the objective should be to remove transactions in relevant stablecoins from tax as far as possible unless real economic value is derived. It warns that many users do not distinguish, in practical terms, between holding a US dollar stablecoin and holding US dollars in a bank account, so wider retail use could lead people into a compliance problem without real awareness of the tax issue. ICAEW’s preferred personal-tax approach is to extend the debt exemption so that disposal of relevant stablecoins would result in neither a gain nor a loss, including for non-sterling stablecoins.

The hard part is scope. HMRC is considering whether some stablecoins should be treated as exempt assets or whether low-value reporting requirements should be relaxed. But it also needs to decide which stablecoins qualify: sterling only, non-sterling as well, UK-issued only, regulated only, asset-backed only, or a wider category. HMRC recognises that limiting reform to UK-issued qualifying stablecoins would initially have limited impact, because the market is not currently built around those instruments.

There is also a DeFi risk. ICAEW cautions that any exemption should be aligned with the developing no-gain/no-loss framework for DeFi, otherwise taxpayers could potentially convert volatile cryptoassets into exempt stablecoins through liquidity pools and crystallise gains in unintended ways. ICAEW therefore suggests targeting relief at genuine payment use cases, such as exchanging stablecoins for fiat currency or using them to buy goods and services, while keeping crypto-to-crypto swaps and liquidity-pool activity within the charge to tax.

The question is whether HMRC is likely to listen. The record is mixed but not hopeless. There is a relevant crypto-tax precedent: HMRC ran a call for evidence on DeFi lending and staking in 2022, followed by a consultation in 2023 (https://www.gov.uk/government/consultations/the-taxation-of-decentralised-finance-involving-the-lending-and-staking-of-cryptoassets/outcome/the-taxation-of-decentralised-finance-defi-involving-the-lending-and-staking-of-cryptoassets-summary-of-responses). In its 2025 summary of responses, HMRC said stakeholders wanted rules that better reflected economic reality and made compliance more straightforward. HMRC also said it had continued stakeholder engagement and was developing a potential no-gain/no-loss approach, including for automated market makers.

That does not mean every recommendation will be accepted. In the DeFi response, the government decided not currently to explore specific provisions changing the taxation of rewards from cryptoasset loans and liquidity pools, although it said it would keep the issue under review. This is a useful warning: calls for evidence can influence policy design, but they do not guarantee taxpayer-friendly reform.

The wider compliance direction is also not simply deregulatory. Under the Cryptoasset Reporting Framework, HMRC is moving towards greater information reporting by cryptoasset service providers. The government decided to extend CARF to domestic reporting on UK customers, with collection from 1 January 2026 and first reports for the 2026 calendar year due by 31 May 2027. That may improve HMRC visibility, but it does not itself simplify the CGT calculations individuals must perform.

The outlook for individuals is therefore cautiously positive, but only on stablecoin-specific simplification. HMRC has acknowledged the administrative burden; CIOT and ICAEW have supplied practical reform options; and the DeFi precedent shows that stakeholder responses can move HMRC’s thinking. But until legislation or revised rules are introduced, individuals should assume the current position remains: crypto-to-crypto swaps, stablecoin disposals, and stablecoin payments can all create CGT events, and the record-keeping burden remains with the taxpayer.

The best outcome would be a targeted reform that removes genuine stablecoin payment and cash-equivalent transactions from unnecessary CGT compliance, while preserving taxation where real economic gains are realised. That would not solve every crypto tax problem, but it would address one of the clearest mismatches in the current system: treating a payment-like digital asset as though every use of it were an investment disposal. Whether HMRC goes that far remains to be seen.

With warm regards,

Dmitry Zapol
Partner, international tax advisor, ADIT (Affiliate)
IFS Consultants, London
(www.ifsconsultants.com, dmitry@ifsconsultants.com)

The post Stablecoins and the UK’s Crypto Tax Headache: Is Simplification Finally Coming? appeared first on IFS Consultants Ltd.

Anti-money laundering registration: a practical warning for regulated businesses

Anti-money laundering supervision is not only a concern for banks, payment firms or large financial institutions. Under the UK Money Laundering Regulations, a range of businesses must be supervised if they carry on relevant activities by way of business. HMRC’s own guidance makes the point directly: every business covered by the regulations must be monitored by a supervisory authority, and businesses not otherwise supervised may need to register with HMRC (https://www.gov.uk/guidance/money-laundering-regulations-who-needs-to-register). The list includes money service businesses, high value dealers, trust or company service providers, accountancy service providers, estate agency businesses, art market participants and letting agency businesses. For art market participants, the threshold is linked to transactions in works of art valued at 10,000 euros or more. For letting agency businesses, the threshold is property or land rented at the equivalent of 10,000 euros or more a month.

At IFS Consultants (www.ifsconsultants.com), for example, we are registered with HMRC for anti-money laundering supervision. HMRC is, in this context, the UK tax authority and the relevant supervisory authority for businesses that fall within its AML remit. That registration is not just an administrative label. It brings with it standards and compliance expectations around customer due diligence, risk assessment, record keeping, internal controls, training and reporting. These obligations exist to reduce the risk that professional services are misused to launder criminal proceeds or finance terrorism.

The practical point is that some businesses may not immediately think of themselves as being in an AML-regulated sector. An accountant or tax adviser may understand the point. A company formation agent may also expect it. But an estate agent, art dealer, high value dealer or letting agent, particularly one operating as a sole trader or small business, may not appreciate that registration could be required. That assumption can be dangerous.

HMRC guidance is clear that a business must not trade without registering where the regulations apply. Trading while unregistered may result in a penalty or prosecution. In some cases, such as money service businesses and trust or company service providers, the business must not trade until HMRC has confirmed that registration has been successful.

A recent First-tier Tribunal case illustrates the point. In Sivarajah [2026] UKFTT 649 (TC) (https://www.iclr.co.uk/document/2026003664/2026ukftt649tc_TNA/html), the taxpayer was a qualified accountant and ACCA member who began providing bookkeeping services on a self-employed basis. He did not hold an ACCA practising certificate. That distinction mattered: membership of a professional body was not enough to make the ACCA his AML supervisor. Because he was not supervised by ACCA for AML purposes, he needed to register with HMRC. He did not do so when he started trading.

Mr Sivarajah had not ignored the issue entirely. He had looked at HMRC guidance and had spoken to other accountants. However, he misunderstood the position, wrongly believing that he did not need to register until turnover exceeded £30,000. He later accepted that this threshold related to a different category of business and did not apply to him. When he realised that his earnings would exceed £30,000, he voluntarily applied to register. HMRC still imposed a penalty for the period during which he had traded unregistered.

The Tribunal dismissed his appeal. The key issue was whether he had taken all reasonable steps and exercised all due diligence to ensure that the registration requirement was complied with. The Tribunal held that this is a high bar. Researching online and speaking to other accountants was not enough where he remained uncertain. He should have taken steps to resolve the uncertainty, including contacting HMRC or ACCA. The fact that contacting HMRC can be difficult did not remove that obligation.

The case is also notable for its discussion of penalties. The penalty was not treated as purely punitive in a narrow personal sense. It had to be effective, proportionate and dissuasive. The Tribunal accepted that the deterrent effect is not limited to the person penalised. It can also be directed at businesses generally, by making clear that non-registration has real consequences.

There are three practical lessons.

First, do not assume that AML supervision is someone else’s problem. If your business falls within one of the relevant sectors, the starting point should be to identify the correct supervisory authority and confirm whether registration is required.

Secondly, membership of a professional body, trade association or regulatory organisation does not automatically mean that you are supervised for AML purposes. The details matter. You may need a practising certificate, specific authorisation or a particular regulated status.

Thirdly, uncertainty must be actively resolved. It is not enough to skim guidance, rely on informal conversations or assume that a threshold applies. If the position is unclear, the prudent course is to check the legislation, HMRC guidance, your professional body’s rules and, where necessary, contact the supervisory authority directly.

AML registration is therefore not a box-ticking exercise. It is a gateway into a compliance regime designed to protect the integrity of the professional and commercial sectors. For businesses in sectors such as accountancy, tax advice, company services, estate agency, art dealing and high-value letting, the safest approach is to treat the issue seriously at the outset. A mistaken assumption may still be a breach, and a well-intentioned business can still face penalties, publication and reputational damage if it trades without the required supervision.

With warm regards,

Dmitry Zapol
Partner, international tax advisor, ADIT (Affiliate)
IFS Consultants, London
(www.ifsconsultants.com, dmitry@ifsconsultants.com)

The post Anti-money laundering registration: a practical warning for regulated businesses appeared first on IFS Consultants Ltd.

A short practical note on Michael Parker v HMRC, a rare published decision on the UK Statutory Residence Test.

Краткая практическая заметка о деле Michael Parker v HMRC, редком опубликованном решении по статутному тесту налогового резидентства Великобритании

The article explains why UK tax residence is determined by objective statutory conditions rather than broader personal connections, and how day counting, transit days, exceptional circumstances and documentary evidence operate in practice. The case is a useful reminder that taxpayers should keep detailed records of travel movements and avoid planning too close to UK day-count thresholds. 

UK tax residence: practical lessons from Parker v HMRC

UK tax residence is determined strictly by the objective conditions in the Statutory Residence Test. It is not determined by asking where a person’s centre of vital interests is located, whether they have UK bank accounts, whether they have a social life in the UK, or whether they feel personally connected with the UK.

Since 6 April 2013, the starting point is Schedule 45 to the Finance Act 2013. The test is statutory. It is based on days, work, ties and specific objective conditions. For domestic UK tax residence purposes, general personal connections with the UK are not enough.

For completeness, the position was different before April 2013, when UK residence was governed by case law and HMRC practice. Wider connections could then have more significance. Similar concepts may also be relevant under a double tax treaty tiebreaker, or when determining long-term residence for inheritance tax. Those are separate questions.

Michael Parker v HMRC, [2026] UKFTT 652 (TC)

https://www.iclr.co.uk/document/2026003699/2026ukftt652tc_TNA/html, is useful because published cases on the Statutory Residence Test are rare. It shows how the test works in practice, and how closely HMRC may examine the evidence when the taxpayer is close to a day-count threshold.

Mr Parker was a chartered engineer working overseas in the Kurdistan Region of Iraq. In 2019/20 he worked on a rotational basis. His employer arranged and paid for return flights between Iraq and London. He then used Heathrow as a hub for onward travel, including holidays to Naples, Tokyo and Dublin. The Tribunal accepted that this was cheaper and logistically easier than booking more complex single or multi-stop tickets.

The numbers were decisive. Mr Parker was physically present in the UK at midnight on 100 days in 2019/20. HMRC accepted that seven days were disregarded because of Covid. That left 93 days. Mr Parker argued that four further days should be disregarded: three under the transit exception and one under the exceptional circumstances exception. If those four days were disregarded, his UK day count was 89 and he was non-UK resident. If they counted, his UK day count was 93 and he was UK resident.

The first issue concerned three transit days: 8 February, 17 February and 28 February 2020. On each occasion, Mr Parker arrived at Heathrow, stayed overnight at a hotel near Heathrow, and left the UK the next day for another country. He did not go to his UK family home. He did not travel into central London. He did not work in the UK. He did not use the UK stay as a destination in itself.

His activities were limited to Heathrow, the airport hotel, meals, sleeping, reading, watching television, using the internet, and travelling between the airport and hotel. The Tribunal treated these activities as consistent with transit.

HMRC argued that the transit exception should not apply because Mr Parker was travelling on separate tickets rather than one through-ticket. The Tribunal rejected this. The legislation did not require a single ticket. What mattered was whether he arrived as a passenger, left the UK the next day, and did not carry out activities substantially unrelated to his passage through the UK.

HMRC also relied on the fact that Mr Parker met his wife and stepdaughter. The Tribunal rejected this point on the facts. They were travelling with him on the relevant onward journeys. This was not a separate UK visit or social activity. It was connected with the onward travel.

The Tribunal therefore accepted that the three days fell within the transit exception.

The second issue concerned 29 February 2020. Mr Parker boarded a British Airways flight from Heathrow to Dublin. The flight was cancelled because Dublin Airport was affected by Storm Jorge. Passengers had already boarded and were then required to disembark. BA retained Mr Parker’s checked luggage overnight, gave him food and hotel accommodation near the airport, and rebooked him on a flight to Dublin the following morning.

HMRC argued that adverse weather and flight cancellation did not amount to exceptional circumstances. HMRC also argued that Mr Parker had not done enough to leave the UK as soon as possible. In substance, HMRC said he should have looked for another flight or another way of leaving the UK that day.

The Tribunal took a practical approach. It accepted that the circumstances were exceptional. It looked at the position as it presented itself at the time, not with hindsight. Mr Parker was not required to ignore BA’s arrangements, abandon his checked luggage, or attempt speculative alternative travel during significant disruption. Leaving the next morning on the rebooked BA flight was sufficient.

This is an important practical point. The exceptional circumstances exception is not applied by asking whether some theoretical alternative might have existed. The question is whether, in practical reality, the taxpayer was prevented from leaving and whether they left as soon as the circumstances permitted.

The case also shows the importance of objective evidence. Mr Parker succeeded because he could support his account. The evidence included boarding passes, flight cancellation documents, hotel invoices, bank and credit card statements, and evidence of wider travel disruption. HMRC did not simply accept the taxpayer’s version of events. The facts had to be proved.

That is often the difference between a residence position and a residence dispute. The Statutory Residence Test is objective, but the taxpayer still needs evidence of the objective facts. Anyone close to a threshold should keep a residence file. This should include travel bookings, boarding passes, hotel invoices, card statements, airline correspondence, cancellation notices, and any evidence explaining unusual movements or disruption.

The practical lesson is not to plan up to the limit. Mr Parker won, but only after an HMRC enquiry and Tribunal proceedings. The better approach is to leave a margin. Cancelled flights, adverse weather, illness, transport strikes and family emergencies can all affect a day count. Not all unexpected events will qualify as exceptional circumstances.

As a practical guide, a person who spends fewer than 46 midnights in the UK in a tax year is generally on the safer side, although the full Statutory Residence Test must still be checked. If a person has never been UK tax resident, staying below 91 days is generally considered a safer planning position. Once a person spends 91 days or more in the UK, the position can become materially more dangerous, particularly if they have UK ties.

These are not universal safe harbours. The result always depends on the full SRT analysis, including automatic overseas tests, automatic UK tests and the sufficient ties test.

Parker is a useful taxpayer-friendly decision. It confirms that the SRT is objective, but that the Tribunal can apply the statutory rules with practical common sense. The main lesson remains simple: count days carefully, keep documents, and do not cut close to the thresholds.

Налоговое резидентство в Великобритании: практические выводы из дела Parker v HMRC

Краткая практическая заметка о деле Michael Parker v HMRC, редком опубликованном решении по статутному тесту налогового резидентства Великобритании. В статье объясняется, почему налоговое резидентство определяется объективными условиями закона, а не общими личными связями с Великобританией, и как на практике работают подсчёт дней, транзитные дни, исключительные обстоятельства и документальное подтверждение поездок. Это дело полезно напоминает, что налогоплательщикам важно вести точный учёт передвижений и не планировать пребывание в Великобритании слишком близко к пороговым значениям.

Налоговое резидентство в Великобритании определяется строго по объективным условиям статутного теста резидентства (Statutory Residence Test). Оно не определяется тем, где находится центр жизненных интересов человека, есть ли у него банковские счета в Великобритании, есть ли здесь круг общения, семья, друзья или иные личные связи.

С 6 апреля 2013 года отправная точка для определения налогового резидентства в Великобритании содержится в Приложении 45 к Закону о финансах 2013 года. Это формализованный тест. Он основан на количестве дней, работе, связях с Великобританией и конкретных объективных условиях. Общего ощущения, что жизнь человека в значительной степени связана с Великобританией, недостаточно.

Для полноты надо оговориться, что до апреля 2013 года ситуация была иной. Тогда резидентство определялось на основании судебной практики и подходов HMRC, и более широкие фактические связи могли иметь большее значение. Похожие концепции также могут быть важны при применении правил международных налоговых соглашений, например при анализе центра жизненных интересов, а также при определении долгосрочного резидентства для целей налога на наследство. Но это отдельные вопросы.

Дело Michael Parker v HMRC, [2026] UKFTT 652 (TC)

https://www.iclr.co.uk/document/2026003699/2026ukftt652tc_TNA/html, полезно именно потому, что опубликованных решений по практическому применению статутного теста резидентства немного. Оно показывает, как этот тест работает на практике, и насколько тщательно HMRC может проверять доказательства, если налогоплательщик находится близко к пороговому количеству дней.

Господин Parker был инженером и работал за пределами Великобритании, в Курдском регионе Ирака. В 2019/20 налоговом году он работал по ротационной схеме. Работодатель организовывал и оплачивал его перелёты между Ираком и Лондоном. Далее он использовал Хитроу как пересадочный пункт для поездок в другие страны, включая Неаполь, Токио и Дублин. Суд принял его объяснение, что такой маршрут был дешевле и логистически проще, чем покупка более сложных билетов с несколькими сегментами.

Ключевым был подсчёт дней. В 2019/20 налоговом году господин Parker физически находился в Великобритании в полночь в течение 100 дней. HMRC согласилась, что семь дней не должны учитываться из-за Covid. Оставалось 93 дня. Господин Parker утверждал, что ещё четыре дня также не должны учитываться: три дня по исключению для транзита и один день по исключительным обстоятельствам. Если эти четыре дня исключались, его количество дней в Великобритании составляло 89, и он не был налоговым резидентом Великобритании. Если они учитывались, количество дней составляло 93, и он становился налоговым резидентом Великобритании.

Первый спор касался трёх транзитных дней: 8 февраля, 17 февраля и 28 февраля 2020 года. В каждый из этих дней господин Parker прилетал в Хитроу, останавливался на ночь в гостинице рядом с аэропортом и на следующий день вылетал из Великобритании в другую страну. Он не ездил домой в Великобритании. Он не ездил в центр Лондона. Он не работал в Великобритании. Он не использовал пребывание в стране как самостоятельную цель поездки.

Его действия ограничивались аэропортом, гостиницей у аэропорта, приёмом пищи, сном, чтением, просмотром телевизора, использованием интернета и поездками между гостиницей и аэропортом. Суд признал, что всё это соответствует обычному поведению пассажира в транзите.

HMRC утверждала, что исключение для транзита не должно применяться, поскольку господин Parker путешествовал по отдельным билетам, а не по единому сквозному билету. Суд этот аргумент отклонил. Закон не требует, чтобы у человека был один единый билет. Важно было другое: прибыл ли он в Великобританию как пассажир, покинул ли он Великобританию на следующий день и занимался ли он в промежутке действиями, которые в существенной степени не связаны с его транзитом через Великобританию.

HMRC также ссылалась на то, что господин Parker встречался с женой и падчерицей. Суд отклонил и этот аргумент. По фактам дела они путешествовали вместе с ним на соответствующих последующих сегментах маршрута. Это не было отдельным визитом в Великобританию или отдельной социальной активностью. Это было связано с дальнейшим перелётом.

Поэтому суд признал, что три дня подпадают под исключение для транзита.

Второй спор касался 29 февраля 2020 года. Господин Parker сел на рейс British Airways из Хитроу в Дублин. Рейс был отменён, потому что аэропорт Дублина был затронут штормом Jorge. Пассажиры уже находились на борту, после чего им пришлось выйти из самолёта. British Airways оставила зарегистрированный багаж господина Parker у себя на ночь, предоставила питание и гостиницу рядом с аэропортом и перебронировала его на рейс в Дублин на следующее утро.

HMRC утверждала, что плохая погода и отмена рейса не являются исключительными обстоятельствами. Кроме того, HMRC утверждала, что господин Parker не сделал достаточно, чтобы покинуть Великобританию как можно скорее. По сути, HMRC считала, что он должен был искать другой рейс или другой способ покинуть Великобританию в тот же день.

Суд подошёл к вопросу прагматично. Он признал обстоятельства исключительными. Он оценивал ситуацию так, как она выглядела на тот момент, а не задним числом. От господина Parker не требовалось игнорировать организационные решения авиакомпании, бросать зарегистрированный багаж или пытаться найти гипотетический альтернативный маршрут в условиях серьёзного сбоя авиасообщения. Вылет на следующее утро рейсом, на который его перебронировала British Airways, был достаточным.

Это один из самых важных практических выводов из дела. Исключительные обстоятельства не анализируются через вопрос о том, существовала ли в теории какая-то иная возможность покинуть страну. Вопрос в том, был ли человек в реальности лишён возможности уехать и покинул ли он Великобританию, как только обстоятельства это позволили.

Дело также показывает значение доказательств. Господин Parker выиграл не потому, что суд просто поверил его словам. Он смог подтвердить факты документами. В материалах были посадочные талоны, документы об отмене рейса, счета из гостиниц, банковские выписки, выписки по кредитным картам и доказательства более широких сбоев в авиасообщении. HMRC не приняла его позицию на веру. Факты нужно было доказать.

Это часто и есть разница между устойчивой позицией по резидентству и спором с налоговой. Статутный тест резидентства является объективным, но объективные факты всё равно нужно подтверждать. Если человек находится близко к пороговому количеству дней, ему следует вести отдельный файл по резидентству. В нём должны быть бронирования, посадочные талоны, счета из гостиниц, банковские выписки, переписка с авиакомпаниями, уведомления об отмене рейсов и любые документы, объясняющие необычные перемещения или задержки.

Главный практический вывод не в том, что можно планировать дни вплотную к лимиту. Напротив. Господин Parker выиграл, но только после проверки HMRC и разбирательства в суде. Правильный подход состоит в том, чтобы оставлять запас. Отмена рейса, плохая погода, болезнь, забастовка транспорта или семейные обстоятельства могут повлиять на подсчёт дней. При этом не каждое неожиданное событие обязательно будет признано исключительным обстоятельством.

На практике, если человек проводит в Великобритании менее 46 полуночей в налоговом году, он обычно находится в более безопасной зоне, хотя полный статутный тест всё равно нужно проверять. Если человек никогда раньше не был налоговым резидентом Великобритании, пребывание ниже 91 дня обычно считается более безопасной планировочной позицией. Но если человек проводит в Великобритании 91 день или больше, анализ становится существенно более важным, особенно если у него есть связи с Великобританией.

Эти ориентиры не являются универсальными безопасными гаванями. Результат всегда зависит от полного анализа статутного теста резидентства, включая автоматические тесты нерезидентства, автоматические тесты резидентства и тест достаточных связей.

Parker v HMRC является полезным решением в пользу налогоплательщика. Оно подтверждает, что статутный тест резидентства основан на объективных условиях, но при этом суд может применять эти условия с практическим здравым смыслом. Основной вывод остаётся простым: дни нужно считать аккуратно, документы нужно сохранять, а планировать пребывание в Великобритании вплотную к пороговым значениям не следует.

With warm regards

Dmitry Zapol
Partner, international tax advisor, ADIT (Affiliate)
IFS Consultants, London
(www.ifsconsultants.com, dmitry@ifsconsultants.com)

The post A short practical note on Michael Parker v HMRC, a rare published decision on the UK Statutory Residence Test appeared first on IFS Consultants Ltd.

I’ve just worked my way through the Tax Justice Network’s paper, “The Millionaire Exodus Myth”. They take aim at Henley & Partners’ headline-grabbing claims of a mass flight in 2024 and – looking only as far as December that year – show that virtually no UK millionaires actually packed their bags. Fair play to the authors: for that narrow window they’re right. But their dataset stops four months before 6 April 2025, the day the Finance Act scrapped the remittance basis, so it can’t tell us what’s happening now.

Government spokespeople keep citing a Warwick-LSE model that mined anonymised HMRC records and forecast an extra £3 billion-plus a year in revenue with barely 80 people leaving. Nice econometrics – but it’s still just a model built on pre-2025 behaviour. Meanwhile ministers quote the Office for Budget Responsibility’s £33.8 billion five-year windfall as if it had already been banked, even though the figure comes from a Lords written answer that admits no fresh departure data exists.

What I’m seeing on the ground looks very different. Since Easter three long-standing clients have moved to Italy, Gibraltar and Cyprus, and the list of public departures keeps growing: Richard Gnodde of Goldman Sachs is heading for Milan; steel tycoon Lakshmi Mittal is preparing to follow; Egyptian billionaire Nassef Sawiris has shifted his base to Italy and Abu Dhabi; the Livingstone brothers have slipped off to Monaco; and, according to The Times, French pharma heiress Anne Beaufour and investor Max Gottschalk have left too.

Why are they going? The new Foreign Income & Gains rules give newcomers four tax-free years and then haul them onto the full UK tax net. At the same time – still only a proposal, but spelled out in May’s Home Office white paper – the government wants most migrants to wait ten years before they can settle. If that change goes through, anyone who arrives today faces at least five years of top-rate tax with no guarantee of permanent status. Unsurprisingly, many well-heeled arrivals are doing the sums and deciding four years is enough.

Those determined to stay are being nudged into more complex planning. Offshore insurance bonds and non-reporting funds are perfectly legitimate ways to roll up income and gains until you’re non-resident again, but they cost money to set up and still leave the Treasury empty-handed. Add to that the sense of betrayal among longer-term residents who trusted the 2017 “protected settlement” rules to shield their offshore trusts – rules that vanished overnight on 6 April 2025 – and goodwill is wearing thin.

One client who has chosen to remain put the macro picture starkly. He reckons around 12 000 wealthy families have already left or are leaving. On his back-of-the-envelope maths that’s more than £1 billion a year in lost direct tax, another £750 million in lost VAT, £7.5 billion wiped from domestic trade, and roughly 45 000 jobs gone – before you even count the second-round effects. I can’t vouch for every pound and job in his estimate, but the soft patch in prime-London property and luxury retail suggests he’s not miles off the mark.

So, yes, the Tax Justice Network is right that Henley’s 2024 scare story was overblown – but 2024 is ancient history in tax terms. The real test is playing out now, and the early score-line is clear enough: Milan, Nicosia, Monaco and even Gibraltar are picking up people (and their spending power) that London has chosen to let slip. Unless the UK lines up its tax offer with its immigration rules – and finds a way to keep promises it made back in 2017 – the talk of a “mythical” exodus will look more wishful than factual.

Just as I was about to hit “send” on this newsletter, The Times dropped a new piece (12 June 2025) that underlines everything above. Drawing on Companies House records, it says 4,400 company directors have already shifted their residential base overseas in the past twelve months, with April departures running 75 per cent higher than a year ago and the steepest losses coming from finance, insurance and property – classic non-dom territory. The same article cites Foreign Investors for Britain’s estimate that more than 12,000 non-dom families have relocated and Bloomberg’s calculation that the UK suffered a net loss of 10,800 millionaires in 2024, second only to China. Oxford Economics adds that 60 per cent of tax advisers expect over 40 per cent of their non-dom clients to leave within two years, and the roll-call of individual exits now includes not only Richard Gnodde and the Livingstone brothers but also boxing promoter Eddie Hearn, pharma heiress Anne Beaufour, investor Max Gottschalk, fund manager Alexander Ginzburg and JC Flowers co-president Tim Hanford. In short, the latest hard numbers from The Times line up squarely with what clients, colleagues and I have been witnessing for months – and with the doubts I’ve raised about the Tax Justice Network’s comforting narrative.

With warm regards

Dmitry Zapol
Partner, international tax advisor, ADIT (Affiliate)
IFS Consultants, London
(www.ifsconsultants.com, dmitry@ifsconsultants.com)

Sources

1. Tax Justice Network press release, “Millionaire exodus did not occur,” 10 Jun 2025

The post From Remittance to Resistance: Why the Post-2025 Tax Shake-Up Is Driving Wealth Out of the UK appeared first on IFS Consultants Ltd.