Fear of being investigated if you do not clear stock positions before immigrating to the UK

Hong Kong people are experienced and skilful in buying and selling stocks. Although many people know that the best way to do it before immigrating to the UK is to sell their assets in order to avoid being "squaring accounts after the autumn harvest" by HM Revenue & Customs (HMRC) in the future. This "squaring accounts" may happen after you become a tax resident, you will may have to pay capital gain tax (Captialgain tax) when you sell your assets. HMRC will do a cross check with other local authorities (Cross Check), Once there are obvious discrepancies in the figures, the taxpayer will be contacted to investigate, the investigation may be very troublesome. Don’t try to underestimate the consequences, because stocks are one of the most difficult asset to calculatewhen it used to calculating capital gains tax.

Stock assets are extremely difficult to calculate

Readers who have read the previous article on how to calculate capital gain tax will know that the calculation basis of the entire tax is very simple, that is, the selling price minus the purchase price, and then deducting miscellaneous expenses. The profit obtained is the basis for calculating the tax. However, stock transactions are different from property transactions. In a tax year, securities account holders may have traded hundreds or even thousands of transactions. It is very difficult to calculate the cost price, and the dividends brought during the holding period have not been calculated. Income, it is very difficult to accurately calculate the profit figures for a tax year.

Aged transaction data has the opportunity to "recover"

What is even more troubling is that some stocks may have been held for a long time, for example, they were bought several years ago, and the relevant transaction data may not be obtained by consulting relevant securities companies or banks. It can be said to be an impossible task to calculate the dividend income over the years.

HMRC may proactively investigate

If you have immigrated to the UK and become a tax resident, you have not declared the profits from the stock, but you may withdraw funds and remit them to the UK during the period, this situation will be very risky. Because HMRC found something wrong after cross-checking, there is a chance to suddenly write to the taxpayer on a certain day to inquire about his source of funds. If it is found that it involves stock or securities transactions, the taxpayer may face penalty. At the same time, you must also explain the details to HMRC. If the taxpayer can provide a statement accepted by HMRC, there will naturally be a chance to resolve the crisis; but if the taxpayer fails to provide a acceptable statement, HMRC is likely to conduct further careful investigation, and the taxpayer will have to hand over relevant data and explaining a transaction makes the situation difficult to resolve properly.

Those who have immigrated to the UK and still hold stocks should find a professional accountant as soon as possible

Since no one has yet fully completed the 5+1 procedure, it is unknown whether these factors will affect future settlement. Even if you inquire with HMRC now, you will not get a clear answer. Therefore, before immigrating to the UK, it is still best to sell the stocks first and then buy them after immigrating to the UK, or find a professional accountant to sort out the assets before immigrating to the UK. If you have immigrated to the UK for a while and still have stocks or other assets that have not been sold, it is best to seek advice from an accountant who is familiar with the taxation of the two places as soon as possible to see how to deal with it, so as not to lose too much in the future.