Non resident income.

Non resident income.

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I have obtained a new client who has a UK self assessment tax return to complete though he resides in Prague and has been there since Jan 2013 running his UK based business. Some income from the Czech Republic is paid into his UK business bank account together with other business income from the UK. Are there any special rules with regards to the foreign income as he is no longer a resident? I'd do some further research but it's that time of year. Thanks

Replies (21)

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By Tim Vane
27th Jan 2015 11:18

By UK business do you mean a UK company? Why is he even filling in a UK tax return, is it a property business? Anyhow, foreign income is not taxable if he is non-resident.

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By Snoppy76
27th Jan 2015 11:32

No Self Employed organising language courses in London. When he started self employment he lived in the UK but has since moved to Prague but continues organising the courses.

 

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By Tim Vane
27th Jan 2015 11:39

Does he do all the work from Prague or does he visit the UK to perform the duties? What does the DTT say about where the income is taxable? Does he even need a UK return? I suspect that he will be taxed on the SE income in Prague, but he should seek local advice.

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By Snoppy76
27th Jan 2015 13:46

No operating from Prague full time. As far as I see it the only income that should be detailed on the UK tax return is the income coming from UK based customers that pay into the UK bank account? All income from abroad is irrelevant as he doesn't live in the UK and should be taxed under their taxation laws.

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Portia profile image
By Portia Nina Levin
26th Apr 2015 10:20

(No subject)

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By Snoppy76
27th Jan 2015 14:14

That's so kind. It's not my specialist area so I thought I'd come on here for advice as I haven't got the time at the moment to try and get through to HMRC. Organising language courses means something completely different....

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By Portia Nina Levin
26th Apr 2015 10:21

(No subject)

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By Snoppy76
27th Jan 2015 14:34

So what's the answer without any cryptic sarcastic response.

 

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By Portia Nina Levin
26th Apr 2015 10:22

(No subject)

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By Tim Vane
27th Jan 2015 15:38

There does not seem to be a trade here, though you may need to investigate further.  If it were me, I would ring HMRC, advise them of the facts and ask them to cancel the notice to file a return. All assuming that the facts supported there being no UK trade - verifying that is the first step.

Then I would tell the client to seek local advice in Praha and declare the income there.

 

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By Snoppy76
27th Jan 2015 17:30

Thanks Tim, I was going to phone HMRC but at this time of year getting through to them would take 2 hours rather than the usual hour.

 

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By chicken farmer
28th Jan 2015 00:14

But
You still have not answered Portia's question. What does organising courses really involve? Are you sure he doesn't have a permanent establishment in the UK?

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By JamesAnd
28th Jan 2015 10:39

Control of the business (if there is indeed a business) seems to be being run entirely in Prague so difficult to see how there is a PE in UK. I would recommend you at last make time to read the PE rules in HMRC international manual.

So as Tim and Portia have said, based on limited facts, doubt this income is taxable in the UK.

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By chicken farmer
28th Jan 2015 11:01

James

I think you are taking Portia's name in vain! She said "A non-resident is only liable to UK tax on any trade carried on through a permanent establishment in the UK, which there may or may not be." As the questioner has not provided any details as to what is involved in 'organising courses' no one can give a definite opinion on the client's UK liability. (And, yes, I am fully aware of the rules on PEs).

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By JamesAnd
28th Jan 2015 11:43

Sorry Chicken Farmer but I

Sorry Chicken Farmer but I have no idea where you are coming from.

Both Portia and Tim have in my mind clearly said that if there is no PE then no UK tax.

I have stated that there does not appear to be a PE but that this opinion is also based on limited facts

I have also stated in my opening sentence, that this is on the assumption that there is indeed a business. Perhaps for clarity I should have added -  "in the first place"

I am so glad you know the rules on PE as well!

 

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By Portia Nina Levin
26th Apr 2015 10:22

(No subject)

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By Snoppy76
28th Jan 2015 15:10

Which is why I've contracted this out. It's not my area and I've other matters to deal with at this time of year instead of reading manuals. Thanks for your help anyway.

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Replying to Wilson Philips:
Portia profile image
By Portia Nina Levin
26th Apr 2015 10:23

(No subject)

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By JamesAnd
29th Jan 2015 11:20

It's the same time of year for every one yet some people have still taken the time out to at least point you in the right direction.

Presume you are unhappy because you haven't been given a full and frank answer.

It wouldn't take too much time to review the pages in the manuals and you might find the experience of researching and finding the answer quite rewarding.

If after doing your own research you were still unsure I am sure there are many people on here who would then have been happy to have helped you further.

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By JamesAnd
31st Jan 2015 09:47

I have a 3rd rule - get my work done so I can be safely tucked up in bed at 23.35 rather than still working!!

And before you ask I have a client base of over 4 figures!

Despite also being very busy myself at the time inthe end I tried to help you all be it with caveats because wether you like it or not, you didn't provide enough information to be able to give a clearer answer and in regards to the research I also gave you a pointer as to where to look for further help, given I have dealt with this area before. It didn't mean you had to drop everything there and then to do the research but at least you had been provided with pointers when you did have the time. And finally, as I also said, if you still needed help I and probably others would have been happy to oblige.

Don't work to hard today stroppy, sorry snoppy76!!

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By Snoppy76
02nd Feb 2015 10:44

? I'm not stroppy, far from it infact. I think you've misunderstood my point. I appreciate all help and guidance and I admit I didn't provide enough information. I obtained 3 new clients last week on top of the 5 the week before. I'm by myself, I didn't know which way to turn and I was rushing about, hence my lack of information. The clients will be back next year (though I will make sure it's earlier). The fact is I follow your rule number 3 but in a real world sometimes it's not possible and you don't know my circumstances yet presumed I was unhappy with people who were trying to help (including yourself). Which is incorrect. 

Anyway draw a line under this. There's no need for pettiness.

P.S I wasn't working Friday night and at any point on Saturday.

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