Moving to the UK? Could you be eligible for transfer of residence relief?

A recent First Tier Tribunal case (Mr Stewart Bowman and Commissioners for H M Revenue & Customs) upholding a decision to refuse Mr Bowman’s application for transfer of residence relief reiterated the need for careful planning when considering such a move.

What is transfer of residence relief (ToR)?

Put simply, transfer of residence relief (ToR) enables overseas individuals, who wish to make the UK their main home, the ability to claim relief from import duties and charges (including VAT) when importing their personal possessions into the UK.

We have assisted with a number of applications for this relief where individuals have brought high value personal possessions (cars, boats etc) into the UK. In such cases it is critical to:

• confirm eligibility
• collate the correct supporting evidence
• make the claim – at the right time
• import the goods within the time limits

Failure to do any of the above could result in import VAT & duties becoming due on the goods brought to the UK – potentially a very costly error!

Pleasure craft and transfer of residence relief (ToR)?

Subject to all conditions for transfer of residence relief (ToR) being met, this relief is potentially a way of entering a pleasure craft into free circulation in the UK as a vessel with deemed UK VAT paid status.  i.e. Can be treated as if UK import had been paid.

An application must be made to, and approval obtained from, HMRC prior to claiming this relief on the import declaration.

HMRC will only approve the application if due care and attention has been given to the following and the specific conditions been met on:

• the timing of the application for ToR
• how long goods being brought to the UK have been owned prior to importation
• when the actual movement of goods will take place in relation to the date of residency
• the intended use of the goods once brought to the UK

Transfer of residence relief (ToR) in practice

In many cases the decision to move to and take up residency in the UK is fairly clear and made in advance. Whilst it can still require some work to gather the correct supporting evidence, the process of applying and being granted approval for transfer of residence relief (ToR) from HMRC can be relatively straightforward.

However, life doesn’t always go to plan – in the case mentioned above Mr Bowman had initially intended to return to New Zealand and claimed that his decision to make the UK his permanent home was not taken until 2023. He considered his original relocation to the UK in 2012 to be a ‘temporary’ move, with repeated moves back to New Zealand over the next 10 years. As such he determined himself to be ‘normally resident’ in the UK from 30 January 2023 and therefore in time to make a ToR claim.

However, HMRC were satisfied that Mr Bowman became ‘normally resident’ in the UK on 22 September 2012 and should have obtained approval from HMRC and imported his goods by 22 September 2013. As a result, Mr Bowman would have to pay import VAT and duty to bring his possessions into the UK.

Our experience of assisting with applications for ToR has normally involved high value items such as cars and yachts where tens, or even hundreds of thousands of pounds can be at stake. In such cases it is clearly prudent to ensure that conditions are met (i.e. residency hasn’t already been triggered) and timing / paperwork requirements are adhered to.

Expert VAT advice and assistance can help minimise these costly pitfalls and remove some of the stress of relocating to a new country – this is something we can help with.