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Tax credits - offshore worker

Tax credits - offshore worker

Background details; Husband and Wife 2 children under school age
Wife currently looking for p/t work.
From September Husband has been self-employed overseas 8 week stints with 2 weeks back home - this will continue for 4 years.
Annual income is approx 30k. Can anyone point me in the right direction regarding what the Tax Credit situation ?
Drawing a blank on all fronts at the moment .


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24th Dec 2012 07:22

This may help

With kind regards

Clint Westwood

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24th Dec 2012 15:27

Thank you for the link
So if he is less than 8 weeks away he includes his offshore income;
8 weeks or more the joint claim will include a zero for his income
So effectively he can be a non uk tax payer earning a whatever amount and hs Wife can still claim The Child Tax Credit - this is where we are stuck with TCO
Their computer say no .....

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24th Dec 2012 17:21

Exactly 8 weeks?

I think that there are two issues of fact to resolve.

The first point is that in your initial post you said that he would be abroad for stretches of 8 weeks at a time.  I suspect that the reality is that every now and then he will stray over, occasionally under, and sometimes spot on precisely 8 weeks.  In your second post you interpreted the rules as concerning the distinction between "less than 8 weeks" on the one hand and on the other "8 weeks or more".  The linked manual reference distinguishes between "8 weeks or less" v "more than 8 weeks".  The distinction is subtle but for a period of precisely 8 weeks is critical to the outcome.

That said, I have some worries that they may be entitled to disregard visits back to the UK that are as short as 2 weeks at a time.  If they are entltled to do that, then one 8 week period abroad would run into the following 8 week period and so on, so that in the end you would end up way over the 8 week limit and the treatment of "precisely" 8 weeks becomes otiose.  I have not researched that point.

The second fact to resolve is where exactly outside of the UK he will be working.  This link is also of assistance:

Note that if he is working in the EEA, while she remains in the UK, then the joint claim would continue anyway, even if he is away for more than 8 weeks.

There is an additional point of interest.

Never mind for TC purposes, he would for IT purposes I think retain his UK resident status.  However he may also adopt (for IT purposes or its equivalent) resident status in the country in which he works according to the domestic laws of that country.  The UK and that country may have a double taxation agreement.  Most do, and most have adopted the OECD standard model, which may well require that the primary taxing state for the earned income be the country in which the work is carried out.  In that scenario he would not report the income on a UK tax return.

It is the UK taxable income (subject to some adjustments) which is the basis of the abatement calculation.  So we could have a fairly absurd situation of an individual who is in reality earning quite a packet, is entitled to claim tax credits but has no income to report for tax credit purposes.

I have to say that when you end up with an absurd conclusion it behoves you to double check it out, so perhaps not take my word for it.  That said there are no shortages of absurdities in the tax credits regs.

In particular it may be that he would not be undertaking "qualifying remunerative work" for WTC purposes, but even if he only qualifies for CTC he would still be quids in.

Fascinating question.  Thank you.

With kind regards

Clint Westwood

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24th Dec 2012 19:20

Yes indeed fascinating
I have gathered more detailed info;
He is engaged as self employed in Iraq (no DTT) by a company of uncertain residence maybe a base in hereford Uk (a hot bed for ex SAS lads doing these type of protection jobs) head Office Canada.
Started out in Iraq in August a 4 week stint, back for 3 weeks out again for 9 weeks and back now for 3 weeks; then out for 10 weeks to 2nd march.
So far I am of the opinion that the Wife should be entitled to CTC a single claim as of his departure for the second stint of 9 weeks.
I take your point about the > 8 weeks distinction.
He is hoping that the contract will continue passed 5 April 2014 and keeping below 91 days average per year he will be treated non resident as working abroad.
Thank you so much for your help
I would be extremely grateful for any other points or comments
Have A Very Happy Christmas

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24th Dec 2012 19:28

If he is really self-employed ...

... then the resident location of his customer would be irrelevant.  That said, if he has only the one customer, then the question of his self-employed v employed status may be not so clear cut as it appears.

With kind regards

Clint Westwood

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