Pay for contract abroad, kept abroad = No UK tax?

[Menelaus]

http://www.hmrc.gov.uk/cnr/p85_p85s.htm

Spacebo!

[Andy2]

As a UK resident you are taxed on your worldwide income (i.e. it doesn't matter which country you earn it in, or whether you keep the money abroad, you still have to pay tax on it in the UK).

So, its definitely against the rules not to declare it.

As the OP said, the Revenue are also getting pretty good at getting access to information from foreign banks (there are tax disclosure agreements between the UK and most developed countries).

its against the rule but how the heck would revenue know in which country you have bank account

[Menelaus]

its against the rule but how the heck would revenue know in which country you have bank account

EU information sharing directive, transnational data sharing agreements et al

[ASB]

Presumably, he didn't take citizenship of wherever he was?

I think he did, not sure though. http://issuesofdomicile.blogspot.com/

That also links to the commissioners decision and the High Court decision. The most important aspect in my view of this is that it show you cannot rely on HMRC published guidance, part of HMRC case was that it is only guidance after all.

[Andy2]

EU information sharing directive, transnational data sharing agreements et al

what if its out side EU say Australia

[SueEllen]

what if its out side EU say Australia

Most developed countries i.e. Australia have more competent tax offices than in the UK. So you will be paying tax in that country anyway.

And then if Hector comes knocking they will happily give him your details.

You are best of going off to the Middle East or somewhere not so well developed.

[AlanDavis]

Most developed countries i.e. Australia have more competent tax offices than in the UK. So you will be paying tax in that country anyway.

And then if Hector comes knocking they will happily give him your details.

You are best of going off to the Middle East or somewhere not so well developed.

Funnily enough, it is the middle east where my contract will be! No tax there.

The problem is how would I get the money into the UK?

Also, my residency/domicile status may change if I chose to move out there more permanently in 3 months time...and therefore the money will be kept out there until such time...I just need a plan to bring it back to the uk if matters change....

[tim123]

Not for a short contract. To be domiciled overseas for tax purposes you need to be out of the country for a long-ish period (there's a bunch of rules on the HMRC website that specify the rules exactly - think its >6 months).

You need to look up the meaning of "domiciled".

A person can be domiciled outside of the UK, whilst physically resident in the UK for the complete tax year.

tim

[tim123]

Presumably, he didn't take citizenship of wherever he was?

I've explained before why he was TTP, but I'll do it again.

The guy was attempting to claim a domicile of choice as another country so that he could avoid UK tax on his overseas income.

However, if he was not resident in the UK at the time the income was earnt, he wouldn't have any UK tax to pay on his overseas income (using the residency rules) so he wouldn't need to change his domicile. Therefore, he must have been ordinarily resident in the UK for 90 days or more per year, to have got the UK tax bill at all.

Now lets look at the domicile rules. To claim that you have changed you domicile, you must have completely severed your ties with your country of birth.

Do you think that returning to the UK for a minimum of 90 days per year counts as "completely severed"?

tim

[Fred Bloggs]

The guidelines for this kind of scenario are actually pretty clear on the hmrc website. They have considerable discretion in the matter, but it is usually accepted that to not pay UK income tax you must be employed out of the UK for a full tax year with no more than 90 days allowed in the UK. All the info is on the hmrc website, you do not need to be a genius to understand it.