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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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My friend in the last three years had an income from abroad

Resolved Question:

My friend in the last three years had an income from abroad which he did not declare. What could the penalty be?
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi.

Does your friend complete annual self-assessment tax returns? What was the foreign income source?
Customer: replied 2 years ago.

No. He was working for a PAYE company in the UK. He did not complete the annual self assesment. The source of income was his second employment with the foreign company.

Expert:  TonyTax replied 2 years ago.
Thanks.

Leave this with me while I draft my answer.
Customer: replied 2 years ago.

Thanks. If it add any importance, the foreighn income was way below the UK's minimum wage

Expert:  TonyTax replied 2 years ago.
Hi again.

Your friend should disclose the income assuming he was UK resident for the tax years in which he had the foreign income. Depending on the country he worked in, any foreign tax paid will be deductible from the UK tax liability on the same income.

As your friend does not currently complete self-assessment tax returns, he could face a penalty for failure to notify the tax office of a potential UK tax liability. The penalties are tax based so if there is no liability to UK tax since any such liability may be covered by foreign tax paid there will probably be no financial penalty to pay.

If you look at the notes here, the penalty could be up to 100% of any UK tax liability but will be reduced in certain circumstances (see page 4).

I hope this helps but let me know if you have any further questions.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15840
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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