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RECENT WARNINGS FROM advisers highlight a growing issue affecting UK expats returning from Dubai and the wider Gulf. Individuals who believed they had legitimately realised gains while non-resident are now facing unexpected UK tax bills—sometimes running into millions.

In today’s Shipleys Tax brief, we highlight a growing and often misunderstood risk for UK expats returning from Dubai and the Gulf: the UK’s temporary non-residence rules can effectively pull previously untaxed overseas gains back into the UK tax net. What appeared to be a clean, tax-free disposal abroad can quickly turn into a multi-million pound liability on return—particularly where individuals come back within five years or inadvertently trigger UK residence sooner than expected.

With HMRC likely to scrutinise high-value cases closely and limited reliance on “exceptional circumstances”, the margin for error is small. The key message is that timing, structure and residence status must be managed proactively—because once you are back in the UK, the planning window is often already closed.

…the UK’s temporary non-residence rules can effectively pull previously untaxed overseas gains back into the UK tax net.

Why Expats are affected

At the centre of the problem is a rule many people either misunderstand or are simply unaware of: the UK’s temporary non-residence rules. These are designed to prevent individuals from leaving the UK for a short period, disposing of valuable assets tax-free in low-tax jurisdictions such as Dubai, and then returning shortly afterwards.

In general terms, if you leave the UK, become non-resident, and then return within five tax years, HMRC can effectively “look back” and tax certain gains you made while abroad. The result is that a disposal which appeared entirely tax-free at the time can later fall back into the UK tax net.

The real-world impact

This is where many expats are being caught out. A common scenario involves the sale of a business or investment during a period of non-residence—often with no local tax in the UAE. However, if the individual returns to the UK too soon, those gains can be taxed here, typically in the year of return.

For larger transactions, the numbers quickly become significant. It is not unusual for individuals to face tax charges in the millions on gains they assumed were outside the UK system.

UK return tax issue

The position is made more complex by the Statutory Residence Test. Simply returning to the UK—even for reasons outside your control—can increase your UK “day count” and trigger tax residence earlier than expected.

A common scenario involves the sale of a business or investment during a period of non-residence—often with no local tax in the UAE. However, if the individual returns to the UK too soon, those gains can be taxed here, typically in the year of return.

Once UK residence is re-established, the temporary non-residence rules may apply. This means the timing of your return is often just as important as the transaction itself.

Case Study 1: £5m Exit → Unexpected UK Tax Charge

A UK entrepreneur moves to Dubai and becomes non-UK resident. During their time abroad, they sell their business for £5 million, realising a full £5 million gain with no local tax. Confident the position is tax-free, they return to the UK after three years. However, because they have not remained non-resident for five full tax years, the UK’s temporary non-residence rules apply. The gain is effectively brought back into the UK tax net and taxed in the year of return, creating a potential liability of around £1.2 million (at 24% CGT, assuming no reliefs). The issue is not the disposal itself—but the timing of the return.

Case Study 2: Extracting £100,000 from a UK Company While Abroad

An individual leaves the UK and becomes non-resident, while retaining ownership of a UK company. During their period overseas, they extract around £100,000 of profits from the company, assuming this can be done free of UK tax while living in Dubai. They later return to the UK within five years.

Because of the temporary non-residence rules, certain income received during the non-resident period can be caught when the individual becomes UK resident again. HMRC may treat those amounts as taxable in the year of return, meaning what was assumed to be tax-free extraction could instead give rise to an unexpected UK income tax liability. As with capital gains, the risk arises not at the point of extraction—but on returning to the UK within the five-year window.

Exceptional Circumstances

Some individuals have looked to rely on the “exceptional circumstances” provisions, which can allow up to 60 days in the UK to be disregarded where events such as war or travel disruption prevent someone from leaving.

However, this is not a ready made guaranteed solution. HMRC apply rules narrowly and it depends heavily on the specific facts. Where alternative travel options exist—such as relocating temporarily to another country rather than returning to the UK—HMRC may take the view that the exemption does not apply.

In practice, relying on this argument carries risk, particularly where large tax liabilities are involved.

A growing risk

In the current climate, this creates real uncertainty. Many expats have returned to the UK due to instability in the region, while others are considering whether to do so.

The difficulty is that the tax consequences are not always clear-cut, and HMRC is likely to examine high-value cases closely—especially where significant gains have been realised during a short period of non-residence.

Planning before your return

From a practical perspective, this is rarely a situation that can be resolved after the event. The timing of your return, your residence position, and the structure of any disposals all interact in ways that can significantly change the outcome.

In some cases, careful planning—such as delaying a return, restructuring transactions, or considering an interim move to a third country—can materially reduce the risk.

Key takeaway

Leaving the UK does not automatically mean your gains are outside the UK tax system. If there is any possibility of returning within certain time limits, those gains may still be within HMRC’s reach.

Need advice?

If you may have exposure to UK tax while living in Dubai or the Gulf—or are looking to optimise your position—it is essential to review your UK tax affairs before taking any action.

This article is for general information only and does not constitute professional advice. Shipleys Tax does not provide free advice by email or phone. You should seek tailored advice before taking any action.

For further assistance or queries, please contact us below:

Leeds: 0113 320 9284            Sheffield: 0114 272 4984      

Email: info@shipleystax.com

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A SIGNIFICANT UK tax tribunal decision has opened the door to VAT refunds for organisations involved in the supply of locum doctors and temporary medical staff. If your business has historically charged VAT on agency-supplied locums — or if your NHS or private healthcare organisation has absorbed those costs — this is a rare opportunity to revisit past treatment and potentially recover material sums.

HMRC has now confirmed it will not appeal the First-tier Tribunal (FTT) decision and is issuing revised guidance. More importantly, HMRC has also set out the practical route for suppliers to reclaim overpaid VAT, potentially going back up to four years.

In today’s Shipleys Tax brief, we highlight a significant VAT tribunal decision that may allow medical staffing agencies and healthcare providers to reclaim VAT previously charged on locum doctors.

What changed — and why it matters

The dispute arose after the Isle of Wight NHS Trust challenged HMRC’s longstanding view that VAT exemption did not apply to the supply of temporary medical practitioners through agencies. HMRC’s historic position had been that the relevant exemption was limited to traditional “deputising” services such as GP out-of-hours arrangements.

…we highlight a significant VAT tribunal decision that may allow medical staffing agencies and healthcare providers to reclaim VAT previously charged on locum doctors.

The tribunal took a different view. It considered Item 5, Group 7, Schedule 9 of the VAT Act 1994, which exempts “the provision of a deputy” for a registered medical practitioner, and found that HMRC’s interpretation had been too narrow. In practical terms, the tribunal concluded that the exemption can apply to agency-supplied locum doctors, not just to classic deputising models.

That’s a big deal because it directly affects how agencies have treated VAT on locum doctor supplies — and it changes the economics for NHS bodies and private providers who could not fully recover VAT as input tax.

HMRC’s position: no appeal, claims process confirmed

Following the decision, HMRC has said it will not appeal and has indicated that it intends to revise its guidance accordingly. HMRC has also explained how eligible suppliers can correct past VAT treatment. In broad terms, claims can be made by adjusting prior VAT returns or by making a formal repayment claim for overpaid VAT (subject to strict rules and time limits). HMRC has even created a dedicated email channel for submissions.

While HMRC has not gone out of its way to “endorse” the tribunal’s reasoning, the practical message is clear: there is now a route to recover VAT that may previously have been charged on locum doctor supplies.

Who actually benefits — and why it’s commercially sensitive

This is where the story gets interesting, and why a careful strategy matters.

In many cases, NHS bodies and private hospitals may feel the financial pain, but they are not always the party that can make the VAT reclaim. The VAT would typically have been declared by the agency, meaning it is usually the agency that must submit any claim or adjustment. That creates immediate commercial and contractual questions: if an agency reclaims VAT, what happens to pricing, historic invoicing and rebates? And how do parties handle recovery where contracts didn’t anticipate a change like this?

HMRC has said it will not appeal and has indicated that it intends to revise its guidance accordingly.

There is also a technical issue that can’t be ignored: for agencies, changing VAT treatment can affect partial exemption calculations. In short, a reclaim is not always “free money”. Some agencies may find the VAT recovery is reduced after partial exemption adjustments are factored in, or that wider VAT positions need to be reworked.

This is why specialist commentators have described HMRC’s revised stance as more than a minor tweak — it has the potential to unlock refunds, but also to trigger knock-on adjustments across the supply chain.

Should you act now?

If you are a medical recruitment agency, an NHS trust, or a private healthcare provider that routinely uses locum doctors, it is worth exploring this now — not at year end. These claims are time-limited, evidence-driven and often require a structured approach to documentation, contracts and VAT mechanics.

Just as importantly, HMRC guidance is still evolving. The strongest claims tend to be the ones that are properly evidenced, correctly scoped and aligned with the commercial reality of how supplies were made.

How Shipleys Tax can help

Shipleys Tax advises healthcare organisations and medical staffing suppliers on complex VAT issues, including eligibility reviews, quantification, claim strategy, and the knock-on effects on partial exemption and contracts. We focus on building claims that are commercially sensible and technically robust — and we manage the process so you don’t end up creating a second problem while trying to fix the first.

Next step: a confidential VAT review

If you have charged VAT on locum doctor supplies, or absorbed VAT costs you couldn’t recover, now is the time to check your position and quantify the opportunity.

Speak to Shipleys Tax for a confidential review and we’ll assess whether a reclaim is available, estimate the size of the opportunity, and map the safest route forward.

For further assistance or queries, please contact:

Leeds: 0113 320 9284      Sheffield: 0114 272 4984

Email: info@shipleystax.com

This article is for general information only and does not constitute professional advice. Shipleys Tax does not offer free advice by email or phone. Always seek tailored advice before taking action.

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Companies vs LLPs | FICs vs Direct Ownership | EOTs vs Trade Sale | Holding Companies vs Simple Groups

AS UK TAX landscape tightens and reliefs narrow, the most powerful tax and wealth outcomes are no longer achieved through last-minute planning. Instead, they are driven by how a business or investment is owned, structured and positioned for the future.

Whether you are growing a trading company, building a property portfolio, planning succession, or preparing for an eventual exit, structure is strategy. The wrong structure can quietly erode value, restrict options and expose you to unnecessary tax. The right one can support growth, unlock funding, and protect family wealth across generations.

In today’s Shipleys Tax article we take a broad look at some key structural choices facing UK business owners today — and why reviewing them early has never been more important.

Company vs LLP: Certainty or Flexibility?

One of the most common structural decisions is whether to operate through a limited company or a limited liability partnership (LLP).

Whether you are growing a trading company, building a property portfolio, planning succession, or preparing for an eventual exit, structure is strategy.

Limited companies offer:

• Clear separation between business profits and personal tax
• Greater certainty on tax rates and profit retention
• Access to share-based incentives such as EMI
• Cleaner exit routes, particularly for trade sales or private equity

LLPs, by contrast, provide:

• Flexible profit allocation
• Transparency for tax purposes
• Familiarity in professional and advisory sectors

However, LLPs are increasingly under scrutiny, particularly around employer NIC exposure, disguised employment and partner status. For many growing firms, the historic advantages of LLPs are narrowing, while companies provide a more robust and future-proof platform.

The real question is no longer “which structure saves tax today?”, but which structure still works as the business evolves.

Family Investment Companies (FICs) vs Direct Ownership

With inheritance tax receipts rising and nil-rate bands frozen, families holding valuable trading companies or property portfolios are increasingly re-examining how assets are owned.

Direct ownership is simple, but it exposes future growth to inheritance tax and limits succession flexibility.

Family Investment Companies (FICs), when properly structured, can:

• Retain control through voting shares
• Shift future growth to the next generation
• Support long-term succession planning without giving assets away outright
• Integrate with trusts and wider estate planning

FICs are not a “one-size-fits-all” solution. Poorly designed share rights, funding structures or governance can create unintended tax consequences or family tension. Used correctly, however, they remain one of the most effective long-term planning tools available.

FICs are not all about avoiding tax today — they are about controlling who bears tax tomorrow.

Employee Ownership Trusts (EOTs) vs Trade Sales

For founders considering an exit, the choice between an Employee Ownership Trust and a trade sale is as much about values as it is about numbers.

EOTs can offer:

• A tax-efficient exit route
• Business continuity
• Protection of culture and legacy

But they also involve:

• Deferred consideration
• Ongoing governance obligations
• Reduced flexibility following recent changes to CGT relief

FICs are not all about avoiding tax today — they are about controlling who bears tax tomorrow.

Trade sales, by contrast, often deliver:

• Higher upfront value
• Cleaner exits
• Greater certainty for founders

Increasingly, we see hybrid solutions — partial EOTs, management buy-outs, or staged exits — designed to balance tax efficiency, funding, and control.

The best exit is rarely binary — and almost never last-minute.

Holding Companies vs Simple Group Structures

As businesses grow, the question often arises: should you introduce a holding company?

A well-designed group structure can:

• Ring-fence risk between activities
• Enable tax-efficient dividend flows
• Support acquisitions without personal extraction
• Create flexibility for future demergers or partial sales

However, unnecessary complexity brings administrative burden and HMRC attention. The key is purpose-led structuring — building only what supports commercial reality.

Good group structures look simple on paper and powerful in practice.

Common Structural Mistakes

Across sectors, we frequently see:

• Structures copied from peers without regard to risk profile
• LLPs or sole ownership retained long after circumstances change
• Succession and exit planning deferred until value is already crystallising
• Tax planning pursued without a clear commercial narrative

These mistakes rarely fail immediately — they simply become expensive over time.

The Shipleys Tax View

Optimising structure is not about chasing loopholes or short-term tax savings. It is about aligning ownership with where the business, family or investment strategy is heading.

Growth, external capital, succession and exit all pull in different directions. The right structure reconciles them before tax becomes a constraint.

The most expensive tax planning is the kind done too late.

Next Steps

If your business or investment structure has not been reviewed in the last three to five years, there is a strong chance it no longer reflects:

• The current tax environment
• Your growth ambitions
• Your succession or exit plans

Shipleys Tax works with owner-managers, families and boards to stress-test structures against future scenarios — before decisions become irreversible.

For further assistance or queries, please contact:

Leeds: 0113 320 9284     Sheffield: 0114 272 4984       

Email: info@shipleystax.com

This article is for general information only and does not constitute professional advice. Shipleys Tax does not offer free advice by email or phone. Always seek tailored advice before taking action.

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