HMRC Tax Return Enquiries
The majority of individuals who file annual Self Assessment Tax Returns are
likely at some stage to be subject to an in-depth enquiry into Tax Return entries.
This is a fact and whereas such enquiries should not be an annual event,
some individuals may be selected more than once!
To date only a small percentage of our clients have been selected for enquiry.
Previously, we have merely absorbed the additional costs for time spent on such
work without extra charges. However, due to the increased number of cases being
selected, with Britons working abroad a popular choice, we are unable
to continue with this practice.
The time spent in settling enquiries now far exceeds the time covered by our
fixed annual fee. Due to this we must now charge for the extra work/time
carried out on such enquiries. Typically, this amounts to
approximately 5 hours (@ £50 per hour) into 1 Tax Return.
Unless the voluntary Enquiry Protection Fee option is taken up,
the hourly charge will apply to all enquiry work. Unfortunately the
voluntary Enquiry Protection Fee option is not available to
clients in Seafaring employment.
Non Residence
With effect from 06/04/08, the date of arrival into the UK will
count as a day in the UK for averaging purposes, provided you are in the UK at midnight on that day.
Seafarer’s Earnings Deduction
A Seafarer is "someone who performs their employment duties on a ship".
Offshore installations, used in the oil and gas industry, are not
ships and workers on mobile offshore drilling units,
semi-submersibles and jack-up rigs are not “seafarers” and are not entitled to the deduction.
We do not unfortunately handle claims for the 100% Seafarers Earnings Deduction.
IR20/HMRC 6
At long last HM Revenue & Customs have produced a new booklet, for guidance only, concerning Residence/Domicile Status.
Anyone wishing to consider possible claims for Non Residence status would be well advised to read both booklets bearing in mind that much of the HMRC 6 relates to Domicile and should not be confused with Residence.
Foreign Tax Credits
UK residents working overseas can claim credit for tax paid overseas to offset UK tax liability arising on the overseas income, provided original documentation to support this is obtained.
Budget News
Whilst no apparent changes were made in recent Budgets directly affecting Britons
working abroad who are or will be Not Resident/Not Ordinarily Resident, because
of changes to the top rates of income tax from 6/4/10, the potential withdrawal
of Personal Allowances and the restriction of tax relief to Basic Rate with
high incomes could mean considerably increased UK tax liabilities for Britons
working abroad who either pay full UK income tax in respect of foreign earnings
or receive tax relief in respect of foreign tax deductions.
Basically the top rate of income tax from 6/4/10 will be 50% (42.5% on dividends)
for individuals with incomes of more than £150,000.
The Personal Tax Allowance (£6,475 from 6/4/10) will be withdrawn at the rate
of £1.00 for every £2.00 of income over £100,000 from 6/4/10.
Tax relief on personal pension contributions will be restricted to the
Basic Rate for individuals with incomes over £180,000 from 6/4/11 and
relief will be tapered for incomes over £150,000. From 22/4/09, only
Basic Rate tax relief will be available on pension contributions
where the contributions exceed the greater of £20,000 a year or
the individual's normal pattern of contributions.
We stress again that the above changes will not affect any clients
who are definitely regarded as Not Resident/Not Ordinarily Resident but
for any clients or Britons out there who remain liable to UK income tax it
is worthwhile looking at your situations to decide if there is any way
tax liabilities can be minimised.
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