Transfer of Residency and the Impact of Brexit

Transfer of residence relief

How has Brexit affected importing personal belongings to the UK?

This is a tale of two British Citizens who were living and working in France since 1991 and who returned to the UK after retiring.  Having left France, all their possessions were shipped back to the UK – after Brexit – whereby they were subject to £6,211 of import taxes on their own possessions and with reliefs not applicable.  

Mr Brooks (Brooks vs HMRC, TC08333) retired in July 2016 and he and Mrs Brooks decided to move back to the UK – they placed their French (and only) residence on the market.  They rented a property in Bristol (from their daughter) and they registered with a local GP, the local authority, electrical roll and also joined a bridge club (the card game, not the Clifton suspension version). 

For all intent and purposes, they were now resident in the UK from July 2016.  They visited their French property regularly to maintain the property and gardens, they also left most of their furnishings in the French property otherwise they would have had to pay for shipping and storage in the UK, plus a furnished house looks better than empty rooms from a sales and marketing perspective. 

Anyone who has ever purchased property in France will know the process is painfully slow.  It was not until November 2020 that a binding sale was agreed and with the additional burden of Covid, the furnishings were not shipped back to the UK until after Brexit (31 December 2020). 

Mr Brooks core defence was that the July 2016 move was in form only, in reality they were still living between France and the UK.  Between July 2016 and November 2020 they had spent 177, 153, 27, 207 and 230 days each year in the UK. 

 

The legislation on importing personal belongings after Brexit

In summary, a person entering the UK is not required to pay any duty or tax in respect of property imported into the UK on condition that: 

  • They were normally resident in another country for a continuous period of at least 12 months
  • They intend to become normally resident in the UK 
  • Their property has been in their possession and used by them in the country they are moving from 
  • The property is declared for relief not earlier than six months before the date on which they become normally resident and not later than 12 months following that date. 

The issue

That last condition reveals the problem.  The return to the UK was in July 2016 when they obtained accommodation and registered for a local GP and local elections.  HMRC were clear that residency was from July 2016 and that the couple could have done a number of things to avoid the issue, such as pay to store the furniture in the UK or sell the furniture in France.  In effect, the relief from duty/tax was not available because they had moved to the UK in 2016 and only moved their possessions 4.5 years later in 2021.  They did not persuade the Tribunal that they were still resident in France up until the sale of the French property. 

It was not helped in that during his career, Mr Brooks paid UK taxes at all times on his earnings and was also a factor in returning to the UK as he had not paid into the French taxation system to obtain healthcare and other social benefits.  

Whilst it may have made sense to keep their possession in France until the property was sold, it took 4 years before the possessions could be moved to the UK, by which time Brexit had happened and the free movement of goods were no longer applicable. 

The Tribunal had sympathy for the couple but the rules required the goods to be moved within 12 months of becoming resident in the UK.   

The Tribunal then considered if there were any exceptional circumstances, the Tribunal concluding there was not.  Brexit was not an unknown quantity, indeed the move back to the UK was driven by Brexit.   

Interestingly, the Tribunal also noted that Covid was not an exceptional event because almost everyone everywhere was affected, which is an unusual way to look at it.   

 

Jason is on hand to discuss any matters regarding VAT, Import and Export Duty and where changes as a result of Brexit may affect you. Please fill out the form below or contact Jason directly – details on the right,

 

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