Dutch Tax 30% Ruling

Dutch Tax 30% Ruling

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Hi

I have a cleint who worked in the Netherlands for the UK tax years 2008/09 to 2011/12, during these years he remained UK resident. He prepared and submitted his own tax returns for each year. However, the Dutch tax and NI (if you will), is rolled in to one and he had claimed the whole deduction for foreign tax. On his returns he entered the total gross pay and the total tax and (NI). HMRC are now demanding around £7.5K for each of the tax years.

He did however, receive the 30% deduction as a skilled worker, this deduction is for the sole purpose of covering accommodation and living costs while working in Holland. The cleint did not take this into account when he prepared his returns.

I have recalulated all years concerned and have gone back to HMRC advising the 30% deduction should qualify under Sec 376 for foreign accommodation and subsistence costs as it is a part of his pay for the specific purpose of covering living expenses, I also pointed out to HMRC the amounts involved were less than the HMRC Worldwide Subsistence rates and it would be reasonable to use the lower of the two. HMRC have now come back stating that in their 'opinion' the 30% deduction is a round sum payment. I disagree, surely a round sum payment is a payment made in addition to the employees nornal pay, the Dutch 30% deduction is an appropriation of the employees normal pay which by definition is not a round sum payment.

Are HMRC clutching at straws here and that my thinking that Sec 376 applies is correct?

Bear in mind that in my calculations he is looking at around £500 total UK tax as apposed to a potential £30K HMRC are dreaming of!

Any thoughts thanks

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By GuestXXX
17th Mar 2015 16:30

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By User deleted
09th Apr 2014 16:16

it is now Baker Tilly - it was Tenon 7 years ago when I set t his account up!

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By GuestXXX
17th Mar 2015 16:31

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