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bigduckontax
bigduckontax, Accountant
Category: Tax
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, I worked in India between June 2007 and October 2011.

Customer Question

Hi, I worked in India between June 2007 and October 2011. I have received a tax audit notice for the period 2012 - 2013, regarding my UK assets (house bank accounts etc).
I have not replied to this notice and I have been told that the tax officer may add adhoc amounts based on his judgment and initiate penalty proceedings and at his discretion.
I have also been told that "the tax officer may also connect with you through diplomatic channels using the relevant tax treaties signed with India, to recover the demand so raised."
My question is: Is it possible for the UK courts to enforce an Indian tax demand?
Thanks, ***** *****
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello Mike, I'm Keith and happy to help you with your question.
The purpose of a tax audit notice is, according to the Income Tax Department Government of India;
'One of the objectives of tax audit is to ascertain/derive/report the requirements of Form Nos. 3CA/3CB and 3CD. Apart from reporting requirements of Form Nos. 3CA/3CB and 3CD, a proper audit for tax purposes would ensure that the books of account and other records are properly maintained, that they faithfully reflect the income of the taxpayer and claims for deduction are correctly made by him. Such audit would also help in checking fraudulent practices. It can also facilitate the administration of tax laws by a proper presentation of accounts before the tax authorities and considerably save the time of Assessing Officers in carrying out routine verifications, like checking correctness of totals and verifying whether purchases and sales are properly vouched for or not. The time of the Assessing Officers saved could be utilised for attending to more important and investigational aspects of a case.​'
Clearly that Department is in some doubt as to whether you have made appropriate returns to them. If you have then all you need to do is advise them of the position.
My initial thought regards ***** ***** taxation Agreement between the UK and India which precludes income from the same stream being taxed in both jurisdictions. If your income has borne UK taxation then this is allowed as a tax credit against any Ind***** *****ability.
Under Article 28B if the Agreement:
'When a revenue claim of a Contracting State is enforceable under the laws of
that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of collection by the competent authority of the other Contracting State. That revenue claim shall be collected by that other State in accordance with the provisions of its laws applicable to the enforcement and collection of its own taxes as if the revenue claim were a revenue claim of that other State.'
It thus follows that in the final resort an UK Court has jurisdiction over an Indian tax claim should such an action be brought. However, it is clear from the Agreement that this would generally be an HMRC responsibility.
I do hope that I have shed some light on your position.
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3101
Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 1 year ago.
Thank you for your support.

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