Foreign Emoluments

Foreign Emoluments

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A client of mine, who is uk resident, uk ordinarily resident, and non-uk domiciled, was working abroad partly during the tax year 2004/2005.

I understand that we have to gross up the amounts received to work out the tax. Is that correct?

Who is responsible for paying the tax? The company accountant says that the overseas company is not responsible for any tax liability, as the employee has been working wholly abroad.

Any advice on this matter would be greatly appreciated.

Khushal K. Napal

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By AnonymousUser
15th Feb 2006 16:54

Not sure I quite follow..
...if the employee is working abroad for a UK company then even if the actual employer is an overseas company the UK company may still be obliged to operate PAYE. If the overseas company has a presence in the UK i.e. a branch or agency it would be liable to operate PAYE anyway. Of course it may also be the case that the overseas company was obliged to deduct what would be the overseas equivalent of PAYE, but it sounds as if it didn't for whatever reason. As a non-domicilary if the duties were for an overseas employer as long as these were performed wholly overseas,he would only be liable to UK tax on a remittance basis.

I don't see how you can gross up unless the arrangement was to receive X amount net of tax. Otherwise if your client has already been paid gross then that is the amount is taxable on.

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