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TaxRobin, Tax Consultant
Category: Tax
Satisfied Customers: 17198
Experience:  International tax
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Hi, I was giving independent consultancy services in Australia

Customer Question

Hi, I was giving independent consultancy services in Australia (place of permanent residency) to a UK firm in November and December 2013. I moved to London this February (will only stay for 6 months) and still haven't sent any invoice to that company so they can pay me (I haven't received any income from that yet). I was wondering if I should register in the UK as a sole trader and pay the taxes here once they pay me (in a UK bank account), even if the work was done abroad (and expenses incurred then) and what'd be the potential positive and negative implications of that.
Submitted: 4 years ago.
Category: Tax
Expert:  Nicola-mod replied 4 years ago.

I've been working hard to find a Professional to assist you with your question, but sometimes finding the right Professional can take a little longer than expected.

I wonder whether you're ok with continuing to wait for an answer. If you are, please let me know and I will continue my search. If not, feel free to let me know and I will cancel this question for you.

Thank you!
Customer: replied 4 years ago.

Hi, I'd be happy to wait a few days more.

How long approximately do you think it'll take?




Expert:  Nicola-mod replied 4 years ago.
Hello Andres,

We will continue to look for a Professional to assist you. I'm afraid JustAnswer cannot guarantee a time but most questions are answered in a timely manner.

Thank you for your patience,
Expert:  TaxRobin replied 4 years ago.
Thank you for your patience.
You are correct in that your situation is not the norm.
You state you are only staying in the UK for 6 months, you only just have been present in the UK and are not leaving Australia for good. You will retain your residency in Australia then.
If you are an Australian resident and will remain so, you continue to lodge an Australian tax return and declare your worldwide income. If you were a cash basis accounting for your business activity then you earned the income while still not resident in UK. You can only use one basis so if you have been using cash for your accounting then the income was earned in Australia and not taxable to you in the UK as business income.
If you were to register in the UK you would still be required to report the income in Australia because you are still a tax resident of Australia.
Customer: replied 4 years ago.

Hi Robin, thanks for your answer. Unfortunately, it's still not clear for me, I hope you can help me understand better the situation.


Indeed I'll be back in Australia soon and still are, and will be, Australian resident for tax purposes. However, I'll be also trading in the UK within these 6 months, thus I'll have to register and lodge an assessment here. I'm aware of that.


My question is about how to pay taxes for a work realised in a country and paid in another. I haven't been using a particular accounting method because I just started freelancing but had I been using a cash accounting method before wouldn't it make more sense to register the income and pay taxes when and where I receive that cash, otherwise (using the accrual method) I'll be acknowledging a revenue and liable for taxes for something I haven't been paid (I know I could get back the taxes in the future if I'm not paid but I rather not do that).

Also, remember I can be paid (and would rather be paid) in a UK account and haven't send any invoice yet, so that I would be able to send a UK invoice once I register.

I wonder which are the implications of sending a UK invoice to my client and receiving the payment in a UK bank account when I have done the work in Australia, incurred in expenses there, and of course when I wasn't registered in the UK taxation office yet.


I hope I was clear this time and you could help me further.


Expert:  TaxRobin replied 4 years ago.
I was not under the impression that you would be conducting actual business in the UK.
Yes ,it would be easier for you to claim the income while present in the UK and then rely on the tax treaty between the UK and Australia for relief from Double Taxation. This you would claim on your resident return (ATO will grant the relief when you lodge in Australia).
Customer: replied 4 years ago.

Thanks for your answer Robin. So if I understand correctly I could claim the income in the UK and declare that income here even if I was not a UK resident for tax purposes when I was doing the job and incurring in expenses. Am I right.


Even if that's possible, what I had in mind by posting the question was to ease my concerns regarding registering in the UK, sending a UK invoice and claiming the income in the UK. Sorry if I sound repetitive but allow me to list those concerns and ask about them directly.


a. I performed the job in October-November 2013 and will be registering in the UK in February 2014, is there a problem with this?


b. I performed the job while in Australia, is there any problem with this?


c. I incurred expenses in Oct-Nov 2013 (before being registered), any problems?


d. Are there any other implications? Anything else I need to consider?








Expert:  TaxRobin replied 4 years ago.
As I responded before, the income was earned while not a resident so you really should not be declaring it. You were not even in the UK so you were not in any way connected to the UK.
I would advise that you should do what you are planning to do.
You should invoice for the work performed and declare all on Australia return. The expenses can only be claimed while you were do the work. As you will not even register in the UK until now you should not claim expenses from a time when you were not under UK taxation.
Registering and send the invoice for a business that performed services in Australia during a time you were in Australia and not connected in any way to the UK would not be a problem.
Customer: replied 4 years ago.

Hi Robin, thanks for your answer.

I'd like to clarify two more things if you'd allow me:


1. If, as you suggested, I declare all this in Australia without involving UK at all. Would it be a problem if I get paid in a UK bank account. Do the tax authorities in the UK link the individual's assessments with their bank accounts?


2.Are you familiarised with the use of the ABN in Australia. I'm not registered to the ABN so I was wondering what would happen if I send my client an invoice (receipt) without an ABN on it. Would you know the implications of doing that considering I'm dealing with a non-Australian company?



Expert:  TaxRobin replied 4 years ago.
Having the funds transferred to the bank account in the UK would not be a problem. The funds are not taxable just because they are in the bank account. If you transfer some of the foreign income you nominated on your tax return for the purpose of the remittance basis charge to the UK then you may be taxed on that.
When they have to make the payment, if there is no ABN on the supplier's invoice Your invoice to them) or other document relating to the transaction - such as a quote or order form , they will have to withhold 46.5% of the payment unless the total payment for the goods or services is $75 or less.
It is best to get an ABN for your business. If you don't, other businesses have to withhold 46.5% from their payments to you.
Customer: replied 4 years ago.

Hi Robin, sorry I'm not familiarised with the concept of 'remittance basis charge'. For being practical, could I be paid in a UK account, spend all that money in the UK and still expect not to pay taxes for that income in the UK?


Re the ABN, would non Australian companies also be able to withhold a percentage of the payment if no ABN is in quote? Would it be a problem registering to the ABN even after the work was done and expenses incurred?

Expert:  TaxRobin replied 4 years ago.
Non Australia companies would depend on their own country rules.
You are supposed to register prior to do the work in Australia.

You could be paid in the UK for income in another country and not be required to pay tax in the UK but all this is based on your resident status and when the income was earned.

Conceivably you are deeper than you should be because you never registered so how would you prove the earnings were not UK related.