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bigduckontax, Accountant
Category: Tax
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I have been working abroad outside Europe (Middle East) from

Customer Question

I have been working abroad outside Europe (Middle East) from April 2014 on a tax free basis.
Potentially I may return to Europe either 9th February or 23rd February 2015 (this will not be the UK but another Europe Union state - for example Finland/Sweden). This is before the end of the tax year - I intend to undertake paid work BUT not in the UK.
So far in the tax year 2014/2015 I have spent 52 days (non working days i.e. not paid days) in the UK.
If I return to Europe on say, the 9th February - I'm likely to return to the UK on a few weekends and therefore spend an additional say, 8 days in the UK (non working).
Hence in 2014/205 I would have then spent 60 days in the UK.
if I return to Europe on the 9th February 2015- it will be my intention to undertake paid work - it would therefore follow that I will receive an income for around 8 weeks - 9th February to 5th April.
The work from 9th February will be on a self employed basis (via my own company) which will extend beyond 5th April 2015.
I may be able to hold any earnings in this period in an off shore account and effectively not remit anything back to the UK until after the 5th April 2015.
It wouldn't be my intention to pay the local tax. Rather once after 5th April 2015 - I would like to pay UK tax based on earnings going forward in the usual manner.
What is my tax situation/liability?
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.

Hello, I'm Keith and happy to help you with your question.

When you left the UK in April to work in the Middle East you should have completed a form P85 and sent it to your tax office. HMRC would have made you non resident for the tax year after your date of departure. You will now see how critical that date actually was. Also the tax year in which you depart will be split into two portions, one resident and one non resident. Fortunately there is no time limit on sending in a P85 and it can be done on line into the bargain. On your final return to the UK you merely advise HMRC of your return and the reverse process will take place.

Thus after you come back after April 2015, depending on the exact date, the 15/16 tax year might be split, or maybe the 14/15 if you are on the last knockings of that year. Once classed as resident you will, of course, be liable to UK taxation in the normal manner.

As a non resident you may spend up to an aggregate of 91 days in the UK and still retain your non residence status. These 91 day periods can be averaged out over four years, but the general consensus of opinion from experts on this site is never to exceed the magic 91 days in any one tax year.

Working through an UK service company can cause problems. If you are a director of the company you are an employee per se and must be remunerated through PAYE channels. The company and you could also be caught under IR35 where, even were you not a director, payments to you being subject to PAYE as you are deemed an employee under this tax avoidance rule.

If you are also liable to tax in the country in which you are working there may be a Double Taxation Treaty in force; there are hundreds of these. The aim of most of them as far as individuals are concerned is to ensure than an income stream is not taxed in both jurisdictions. This is done by means of tax credits, the tax paid in one country being allowed against any liability in another.

Well, there you are then, a quick canter through the overseas working life from a taxation viewpoint. I do hope that I have managed to enlighten you somewhat.

Customer: replied 3 years ago.

You have not answered the question. I don't want a quick canter through the overseas tax.

The issue is tax liability on monies earned outside the UK during 2014/2015 - and what if any is the tax liability on these earnings if I return to Europe before the 5th April 2015? Having in mind the dates taken in the UK will be less than 90 days.

Expert:  bigduckontax replied 3 years ago.
If you go through the P85 leaving and returning procedure then your arrival and departure tax years will be split as I have described. Thus you overseas earnings will be as a non resident and outside the scope of UK Income Tax.
Sorry for the delayed response; I was travelling back from Asia.