A British expat couple have been hit with a tax bill of almost £10,000 by Spanish authorities despite never working there and moving back to the UK in 2017.
Richard and Jane Brown retired to Spain in October 2010 before returning to their native South Yorkshire seven years later.
When the couple moved to Andalusia, Richard, 70, continued to pay tax on his UK pension to HMRC, meaning he did not have to pay any tax to Hacienda, the Spanish Treasury, given the two countries operate a shared double taxation agreement.
But earlier this month HMRC informed Richard that they owed Hacienda €11,143.57 – equivalent to £9,439.16 – for the 2016 and 2017 tax years.
The couple, who have said the ordeal has caused them great stress, were not provided a reason for the tax bill in the documents they received.
Jane said: ‘I just can’t believe it. It’s so upsetting, and it’s so stressful because I have to deal with the whole situation – it’s been a complete bolt out of the blue.
‘If we had only been back a year I could half understand it, but eight years after leaving the country, it’s a complete joke.
‘We’ve been back in the country for eight years and the letter we received last Friday is the first correspondence we’ve had.
‘Not a single reason or explanation for the tax or why it has grown over time has been given, which makes it seem like a scam.
‘They’ve suddenly decided there was a debt and I believe they sent the letters to our old address, which is why it’s accumulated and it’s gone to HMRC.
Richard and Jane Brown retired to Spain in October 2010 before returning to their native South Yorkshire seven years later
Jane said: ‘I just can’t believe it. It’s so upsetting, and it’s so stressful because I have to deal with the whole situation – it’s been a complete bolt out of the blue’
The couple, who have said the ordeal has caused them great stress, were not provided a reason for the tax bill in the documents they received
Richard and Jane Brown moved to a neighbouring village, Fuente de Piedra, to move into a rented villa in July 2015
‘It’s pathetic, it’s a ridiculous situation. I’ve read somewhere that you are better off paying it and then trying to claim it back, but why should I pay it if we don’t owe anything.
‘Apparently it can take up to four years to claim it back. But I might not be here in four years, which is probably what they’re hoping for.
‘We are shocked to the core.’
The case shines a light on the Spanish Tax Authority’s attitude towards British nationals living in Spain.
A probe by law firm Amsterdam & Partners LLP this month uncovered the ‘systemic use of excessive audit practices involving false and nonexistent claims’.
The rules of the tax treaty dictate that British nationals living in Spain do not have to pay tax twice on pensions, and those who do can claim a refund or full relief from over-payments.
But the backpedalling from Hacienda on the agreement suggests Spanish authorities are violating the terms of the treaty in an attempt to demand money from British expats through stealth.
The couple initially lived on a residential caravan site with other expats in the Andalusian village of Alameda.
They moved to a neighbouring village, Fuente de Piedra, to a rented villa in July 2015, before returning to the UK in April 2017 with Poppy, a Podenco rescue dog.
Jane added: ‘It’s pathetic, it’s a ridiculous situation. I’ve read somewhere that you are better off paying it and then trying to claim it back, but why should I pay it if we don’t owe anything’
The couple initially lived on a residential caravan site with other expats in the Andalusian village of Alameda
Earlier this month HMRC informed Richard that they owed Hacienda €11,143.57 – equivalent to £9,439.16 – for the 2016 and 2017 tax years
Jane added: ‘Why do HMRC suddenly believe Spanish bureaucrats and take on the case, rather than fighting our corner.
‘They know we’ve paid tax in the UK and we can prove that, we’ve still got our 2016/17 tax returns.
‘I honestly thought it was a scam, and my first initial reaction was to chuck it in the bin – but I’ve been in contact with HMRC and they say it’s a real debt.
‘And the interest, how can they charge me interest on a debt that I didn’t know anything about – it’s like a phantom debt.
‘I’m willing to pay it if we genuinely owe it but there’s absolutely no way we owe anything, and if we did, it would never be that much.
‘We retired early to go and live in Spain, because Richard had a stroke when he was 45, and we decided to live off his private pension.
‘And did everything by the book, paying for a bilingual specialist to sort out our affairs when we were in Spain, and we notified them when we left the country and deregistered from their system in the right way.
‘I’ve sent them an email saying I don’t agree with their claims but they haven’t responded yet. I rang the tax office here and they told me to get in touch with Spain – I had to use Google Translate to write the email.
‘But where is the burden of proof? If Richard owes tax off Spain, they should be claiming it from HMRC where we paid tax. Neither of us worked in Spain at all.
‘I think it’s them wanting a quick quid from expats who have gone over there.’
The situation has been made even worse by the interest on their alleged debt, she claimed.
The couple only found about the bill at the start of this month, even though the original claims were made by the Hacienda between 2022 and 2023.
Earlier this month a report from Amsterdam & Partners LLP report described the Spanish tax authorities as ‘rampant and ‘out of control’ in pursuing residents under the country’s so-called 2004 “Beckham Law” tax incentive program – which coincided with David Beckham’s move from Manchester United to Real Madrid in 2003.
Foreign nationals would pay just 24 per cent on their Spanish-sourced income as tax, up to a limit of Euro 600,000 – significantly lower than standard progressive tax rates, which go up to 45 per cent.
The couple only found about the bill at the start of this month, even though the original claims were made by the Hacienda between 2022 and 2023
The couple have now lived in Rotherham, South Yorkshire, for eight years, since returning from Spain
But Amsterdam & Partners LLP’s analysis suggests victims face unexpected tax demands by launching retrospective investigations against foreigners years down the line, with substantial penalties issued to pressure expats into paying immediately or accepting a settlement.
Christopher Wales, a British tax expert and co-author of the white paper, said: “Our white paper documents shocking abuses of state power. Our investigation has uncovered systemic use of excessive audit practices involving false and nonexistent claims.
“A few victims have been successful in appealing these false claims, but it takes years, and justice comes far too late.”
Robert Amsterdam, founding partner of the firm and co-author of the report, added: “This has created an intimidating climate of fear which has no place in a democratic country. The testimonies we have collected have been nothing short of shocking.”
HMRC and Hacienda were approached for comment.
