Reply to: Offshore Contract, Residency & Domicility

[configman]

(1) Any dividends you receive from the ltd company up to the next 05 Apr after you leave will be taxable in the UK;

Not quite correct see http://www.hmrc.gov.uk/cnr/hmrc6.pdf page 43 8.1.1 The year you leave which says:

Although the normal rule in law is that you are taxed as a resident for the
whole of the tax year in which you are UK resident, there is an extra-statutory
concession (ESC A11) that allows the tax year to be split. The effect of this
concession is that you have to pay UK tax as a resident only for the part of the
tax year before you finally leave.

[geoff from contracta IOM]

sound advice.

the only complication is whether i invoice wit my UK ltd company or set up an offshore.

I'm leaning to setting up offshore.

In your case it would be better to speak to an accountant to advise on the best use of your non-dom for overseas income but if the likely timescales you have given hold true you will not be away long enough to break you tax residency in the UK so your Ltd Co. is probably the most effective vehicle and try for part year treatment on your divies.

[prozak]

I personally would advise you to fill the form in when you leave giving them notice you are non-resident from the 1st Dec although you are unlikely to pass the residency test, however if it it turns into the most amazing gig and you are offered a permanent position with fantastic terms and you decide to stay you are 1 year ahead of the game. If you don't you will have lost nothing as all you will pay is the tax that is due. Just fill the form in yourself you don't need to pay an accountant to do it for you. For those thinking of a more permanent move the residency tests are based on a number of factors, here are some simple ones - you can still own a house but if it's not rented out you can return to it at anytime so does not suggest you have left permanently. If your wife and children remain you will almost certainly be classed as still resident in the UK and if you take certain tax benefits and return within 5 years you will get politely asked to pay back some of the benefit.

Form P85 linky -

http://www.hmrc.gov.uk/cnr/p85.pdf

sound advice.

the only complication is whether i invoice wit my UK ltd company or set up an offshore.

I'm leaning to setting up offshore.

[prozak]

Residency and domicile are different - it may be more complicated if you're not domiciled here though.

If you're resident in the UK for 183 days in any tax year then you're usually deemed resident here for that tax year, so that covers 2011. What happens in 2012 depends on when you come back, and potentially any visits you make. In some circumstances 'split year' treatment is available, although the rules around this are changing.

I'd suggest a full discussion with your accountant, it's one of those talks that could digress into different scenarios depending on how long you're away (and whether there's any tax advantage to staying away longer). You also need to know the tax laws in the country you're going to as they could impact on your movements and whether you WANT to lose residency here. Your accountant should be able to research that for you, or point you in the direction of someone who knows more.

yes I am non-domiciled. but reading the remittance basis I'm unlikely to earn enough on this contract to making use of the non-dom worthwhile

Ah right. That cleared one thing up. it is 183 days in the tax year. So I would have to stay away until after september in 2012 to be non-resident that year.

thanks

[geoff from contracta IOM]

So-long Georgie boy

OK so.

A follow up to this.

If I leave the UK on the 1st of december for 184 days.

Should I go the non-resident route?

Should I go for non-resident just in case I extend to 9 months?

Or will i always be considered resident because of my maintaining a house here and my intention to return by the next school year for my son?

I personally would advise you to fill the form in when you leave giving them notice you are non-resident from the 1st Dec although you are unlikely to pass the residency test, however if it it turns into the most amazing gig and you are offered a permanent position with fantastic terms and you decide to stay you are 1 year ahead of the game. If you don't you will have lost nothing as all you will pay is the tax that is due. Just fill the form in yourself you don't need to pay an accountant to do it for you. For those thinking of a more permanent move the residency tests are based on a number of factors, here are some simple ones - you can still own a house but if it's not rented out you can return to it at anytime so does not suggest you have left permanently. If your wife and children remain you will almost certainly be classed as still resident in the UK and if you take certain tax benefits and return within 5 years you will get politely asked to pay back some of the benefit.

Form P85 linky -

http://www.hmrc.gov.uk/cnr/p85.pdf

[Clare@InTouch]

OK so.

A follow up to this.

If I leave the UK on the 1st of december for 184 days.

Should I go the non-resident route?

Should I go for non-resident just in case I extend to 9 months?

Or will i always be considered resident because of my maintaining a house here and my intention to return by the next school year for my son?

Residency and domicile are different - it may be more complicated if you're not domiciled here though.

If you're resident in the UK for 183 days in any tax year then you're usually deemed resident here for that tax year, so that covers 2011. What happens in 2012 depends on when you come back, and potentially any visits you make. In some circumstances 'split year' treatment is available, although the rules around this are changing.

I'd suggest a full discussion with your accountant, it's one of those talks that could digress into different scenarios depending on how long you're away (and whether there's any tax advantage to staying away longer). You also need to know the tax laws in the country you're going to as they could impact on your movements and whether you WANT to lose residency here. Your accountant should be able to research that for you, or point you in the direction of someone who knows more.

[prozak]

OK so.

A follow up to this.

If I leave the UK on the 1st of december for 184 days.

Should I go the non-resident route?

Should I go for non-resident just in case I extend to 9 months?

Or will i always be considered resident because of my maintaining a house here and my intention to return by the next school year for my son?

[prozak]

I don't believe I will be non-resident in my situation.

The contract will only be 6months.

I fully intend on returning to the UK.

[Zoiderman]

Does anyone use the cayman islands anymore?

Very 1980's of you!

£140k a year tax free does

[prozak]

Cayman Islands no less

Does anyone use the cayman islands anymore?

Very 1980's of you!

[Zoiderman]

Afternoon all.

I've got an opportunity to contract in the Caribbean mon.

I am non-dom in the UK (though never needed to test this fact with HMRC) but currently resident.

What is the point at which I am not resident in the UK? Is it a defined timeframe?

What offshore options are there in this circumstance?

Thanks.

Cayman Islands no less

[prozak]

Thanks all.

[Greg@CapitalCity]

Assuming you already have your own ltd company

If you plan on moving away from the UK for the foreseeable future, just be careful with your timing if you can. Although you may cease to be a tax resident on the day you leave, some UK earnings may remain taxable in the UK after you have left.
(1) Any dividends you receive from the ltd company up to the next 05 Apr after you leave will be taxable in the UK;
(2) If you are thinking of closing your company and taking a capital gain using ESC C16 the gain may also be taxable in the UK if it is paid out after you have left. This will be the case if you have been in the UK for at least 4 of the last 7 years;

If you can, clean up the your ltd company finances before you leave - you might need some personal tax planning advice to ensure you avoid Caribbean tax on your UK earnings if you are taking final dividends etc after your tax residency in the Caribbean has commenced.

[geoff from contracta IOM]

Non domiciled is a lot more complex that it used to be, there is now a £30,000 annual charge to be a non-dom so it probably doesn't suit most of us. You would certainly need specialist advice on this and a good advisor to back you up if you were ever investigated.

The charge only applies for those who are non- dom & res , not for non-dom & non res , you can effectively fill out a form, settle any outstanding tax and go on your way. Do remember about applying to be a non-res landlord if you own and intend to rent out your property in the UK.

[Wanderer]

I've got an opportunity to contract in the Caribbean mon.
I am non-dom in the UK (though never needed to test this fact with HMRC) but currently resident.

Non domiciled is a lot more complex that it used to be, there is now a £30,000 annual charge to be a non-dom so it probably doesn't suit most of us. You would certainly need specialist advice on this and a good advisor to back you up if you were ever investigated.