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Tony Tax
Tony Tax, Tax Consultant
Category: UK Tax
Satisfied Customers: 15917
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Hello, I have a question regarding tax treaties. I was

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I have a question regarding tax treaties. I was a non-resident (tourist at the time) in Japan in 2008 and sold a piece of land. I paid withholding tax, but not capital gains tax. I recently received a letter from the local town tax authority where I sold my land saying I owed further capital gains tax. I am a resident in the UK for tax purposes at the moment. Although I was not in 2008. I am wondering what implications of not paying the capital gains tax in Japan would be? Can the Japanese tax authority contact HMRC and will that impact me here?


Take a look at the notes starting here.

As the UK is in the EU, HMRC has agreements with other EU countries tax authorities to assist one another in recovering tax owed by a national of one EU country who lives in another EU country.

If you look at the third page by clicking on "Next Page" at the bottom right you will see that the UK does have tax recovery agreements with other countries outside the EU but Japan appears not to be one of them. What that means is that HMRC would not get involved in tax recovery action pursued by the Japanese tax authorities but that doesn't mean that they (the Japanese tax authorities) would not try to pursue it themselves through the UK courts. Any such action would have no impact on your UK tax postion.

I hope this helps but let me know if you have any further questions.

Customer: replied 4 years ago.

Thank you - that is useful. I have a few other questions, however. I continued reading the pages that you sent and further along it states "Another country may seek assistance in recovering a tax or duty debt where the debtor lives in the UK. In such cases, treat it as if it were a UK income tax debt for recovery purposes."


But, under the section below that "Grounds for refusing a request for recovery"

It also states that "if it appears to you that the debt relates to a tax or duty that is either not covered by the relevant arrangement or has been imposed by the other country contrary to the generally accepted taxation principles."


In this case, would it mean that Japan is "not covered by the relevant arrangement"?

There is no reciprocal arrangement between the UK and Japan so, as of now, the procedures outlined in the link I gave you do not apply.

As the text under the heading starting "Grounds fior refusing......" says " You should not normally refuse a request for assistance from another country to recover a tax debt under these international agreements. The key words are "under these international agreements".
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