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English tax return for a client with an Innovator visa

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Imperial & Legal once helped me realise my dream of moving to the UK and starting my own business here. So when the question arose as to who to turn to for tax optimisation, the answer for me was obvious. Experienced consultants of the company told me about ways to reduce my tax burden and helped me to get everything right. I am very glad that my business is in the hands of professionals!

Santiago, 42 years old
A businessman from Costa Rica
Clients’ names and photos have been changed

Santiago came to the UK from Costa Rica. We knew him from when he applied for his Innovator’s visa to the UK. Imperial & Legal helped him to put together the necessary documents and get approval from the recommendation committee.

The fact is that Santiago had his own business, in which he successfully combined two topics popular in the modern world — health and IT. The result of this integration was a chain of healthy eating establishments with a high-tech bias.

A visitor could pick up any food for himself according to the buffet system. At the entrance, he was given a device which, when reading the qr code of each dish, showed the guest not only the ratio of calories, proteins, fats and carbohydrates, but also the composition of nutrients. Then the system suggested what to combine the chosen dish with, so that the dinner would be as complete and rich in nutrients as possible.

In addition, it was possible to enter your gender, age and weight into the system, as well as select the desired goal (weight loss/gain, replenishment of a vitamin or microelement deficiency, etc.). Based on this, the programme showed what was best to take and in what quantity.

In addition, it was possible to specify restrictions — for example, to enter information about allergies to certain foods, gluten intolerance, or even just to specify the ingredients that you dislike. Then dishes with these products would be excluded from the list of recommendations, and when the qr code was read, a message would appear in red letters stating that the dish was not suitable for this user.

As one of the requirements of the Innovator visa is scalability, Santiago planned his company’s development in advance. Firstly, geographically — he wanted to expand from a single establishment to a chain of restaurants in London and then to other cities in the UK such as Liverpool, Manchester and Belfast.

And secondly, he was going to expand the list of his services over time, and make it so that not people would come for food, but the food would come to them. It was not only about delivering ready-made meals, but also about preparing a full daily ration, when clients would not have to prepare something themselves and puzzle over what they could and could not eat in order to maintain their health and good appearance.

But first he had to build up a reputation, fine-tune all the processes and get back on his feet. Immersed in these concerns, Santiago was reluctant to be distracted from the restaurant and the paperwork, but realised that business, especially in a foreign country, had to be handled impeccably. When he learnt that Imperial & Legal not only provides immigration assistance, but also tax and accounting services, he was relieved to let our accountants take care of these matters, as he knew from his experience with visa applications that our specialists could be trusted.

Our client

Santiago is a 42 year old businessman from Costa Rica. He immigrated to the UK on an Innovator’s visa and opened a healthy eating establishment.

The challenge

Develop a strategy for the taxation and utilisation of finances received in Britain and abroad. Draw up all necessary documents for the fiscal authorities.

The solution

As Santiago had a complex income structure involving income outside the UK, our lawyers advised him to use the remittance tax regime to optimise his tax payment. And as the client was not too familiar with English law, we explained to him in detail how this worked.

Despite the fact that the man obtained permanent residence status in the United Kingdom and became a tax resident, his domicile still belonged to Costa Rica. That is, he had the right to pay taxes on his overseas assets there, while the British Treasury claimed only taxes on income earned directly in the UK, as well as on the money that came into the English account from abroad.

This tax allocation is referred to in UK law as the remittance/remittance tax regime. In practice, this means that an entrepreneur can reduce the tax burden in this way if the rates on income in the home country are significantly lower than in the UK.

Our accountants prepared a personal tax return for Santiago and explained the further tax strategy, which was planned for several years in advance. It took into account that after a few years of his life in the country, the conditions of the remittance tax regime would change, which meant that the calculations would need to be adjusted over time to select the best option.

Thanks to the work of our specialists, the client received a full understanding of what taxes he has to pay and when, as well as practical assistance in this matter. In addition, he has a clear plan for several years ahead, allowing him to optimise his payments while remaining within the legal framework.

Santiago optimised taxation in England in one month

20 June
Applying to Imperial & Legal
+3 days
Assessment of the current situation and analysis of the client's situation
+3 days
Signing of the service agreement
+2 weeks
Collection of all necessary documents and preparation of a draft tax return
+1 week
Harmonisation and preparation of final tax return
20 July
A tax return taking into account the optimal taxation regime is submitted to the tax authority.

The conclusion

The remittance tax regime is a convenient and favourable tool for businessmen who have recently settled in the UK and have income outside this country. But it is worth remembering that the conditions for non-domiciles to use this regime are gradually becoming stricter.

In particular, it starts to be chargeable after a few years. Those who have lived in the country for 7 years out of 9 have to pay £30,000. And for those who have spent 12 years out of 14 in the UK, the cost rises to £60,000. You then need to check which option would be more favourable — paying taxes on overseas income in the country of origin of the income + the cost of remittance in the UK, or giving taxes directly on all income — both English and overseas — to the UK Treasury.

In addition, immigrants who are firmly settled in the United Kingdom are eventually forced to become domiciled in this country. However, this will happen after a very long period of time — a person must be a tax resident of the UK for 15 out of 20 years.

Imperial & Legal can help you understand all of these issues and the opportunities that UK law offers to those who invest in the UK economy and work hard for its benefit.

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