TAX exiles relocating to Guernsey may have to prove they have severed all ties with the UK to avoid the new 50% income tax rate there.

The Court of Appeal in London yesterday threw out appeals against residence and domicile judgements.

Lord Justice Ward said HM Revenue and Customs was entitled to look for a ‘clean break’ with the UK – and that it was being more rigorous in checking that taxpayers in these circumstances had fully severed social, domestic and family ties in Britain.

He said those seeking to leave the UK and become non-resident might need to do far more than simply prove they had satisfied the ‘fewer than 90 midnights on average in the UK in any tax year’ rule.

Guernsey is keen to attract wealthy entrepreneurs. Most recently business tycoon Guy Hands, boss of private equity firm Terra Firma, moved here last April in protest at the UK’s higher income and capital gains tax rates.

Tax director at Ernst & Young in Guernsey Alison Vine (pictured) said the decision could have far-reaching implications for those seeking to leave the UK to avoid the new tax levels.

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