The founder of Matalan John Hargreaves faces a tax bill of up to £135 million after failing to argue against HMRC that he was non-resident.

Hargreaves relocated to Monaco in March 2020, submitting his P85 estimating he’d spend “no more than 2 months” in the UK.

His motivation for moving to Monaco was to become non-tax resident from the UK so that he could sell his shares and avoid capital gains tax.

Hargreaves sold his shares worth £231m in Matalan in May 2000. He then filled out his 2000/01 UK tax return without the “capital gains tax” pages arguing that ‘he was no longer resident in the UK for tax purposes’ and therefore they weren’t applicable.

Despite residing in Monaco he continued to spend 3 days a week in the UK working as Matalan’s executive chairman spending a total of 71 full days in the UK, while he was in the UK at midnight on 112 days & present in the UK for at least part of 152 days during the 2000/01 tax year.

Read how many days can UK expats spend in the UK & retain non-resident status

In 2007 HMRC argued that because he had spent so much time in the UK & also maintained a UK property Hargreaves was a UK tax resident and would need to pay £80m in capital gains tax & £4m in income tax.

Hargreaves had won a 2019 court ruling because HMRC had failed to launch their investigation before a 2003 deadline.

However the Upper Tier Tribunal, which is the highest court that judge tax cases, ruled against Hargreaves on 11 February 2022 leaving Hargreaves with a tax bill of up to £135m due to interest & penalties build up over the last 2 decades.

It is unclear if Hargreaves is appealing this latest ruling but it has previously been reported that he is suing his accountants, PriceWaterhouseCoopers (PwC), for “ineffective tax avoidance advice”.

It goes to show how expats can fall foul of HMRC, even with the most expensive advice. This is why you must make a long term tax plan and execute it over a longer period of time than Mr Hargreaves.

Read, watch & listen to our webinar on how to plan to save capital gains tax.

Create your own long term tax plan

Book a free review to find out how you can successfully avoid capital gains tax.