Showing foreign tax on return

Showing foreign tax on return

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I have a new client who arrived in the UK on 4/4/2010 from Germany and took up a post coaching a Paralympic team in August 2010. He will be in the UK until at least summer 2013 so is resident and ordinarily resident. He registered late for self employment and his tax return is due at the end of February. He has some income from Germany for the period April - Aug 2010 as he was working between the two countries at this time. He is still finalising his German tax and he is likely for that year to exceed £2000 remitted to the UK. I have calculated his UK self employment tax but have as yet still to receive his overseas income which is unlikely to be finalised before the end of February. 

My original plan was to send in his tax return for self assessment and then submit an amended return once his overseas tax is known which should have had tax suffered in Germany. If I complete the overseas residency pages and show that he was tax resident in Germany but don't complete the foreign earnings page or make a claim for double taxation relief is this likely to cause problems with HMRC and trigger an investigation? Or would it be better to do this and but a note in 'any additional information' stating that we are waiting for his German income to be finalised.

I don't want to incur a late filing penalty for him, especially as this is his first UK tax return but equally don't want to make him more likely to an investigation.

Your advice would be much appreciated!

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By pauld
09th Feb 2012 12:59

Remitted income

From what you say, it sounds as if he is resident in the UK from 4 April 2010. However you go on to say he was working between the two countries between  April - August 2010. So firstly I think you need to establish in which country he was resident for this period. If his job started August 2010 it may be that he became UK resident at this time and you can claim split year treatment ignoring foreign income up to this point.

As I assume he will remain non uk domiciled, and his foreign income will be higher than £2,000,but I get the impression it will not be too much higher than this? I assume it will better to declare his worldwide income rather than pay the hefty charge for non doms. In this scenario it doesnt matter how much he remits to uk as you are assessing all foreign claim and claiming appropriate tax credits under the DTR.

As its the 9th Feb, haven't you already incurred a £100 penalty? Therefore,I would aim to get all the german info and submit before the end of February. If info still not available, i would complete residence pages and claim split year treatment if applicable, find out his sources of germa/foreignn income and estimate the german tax paid on this income (Client should be able to provide you with some rough figures at least). Show on the return that the figures are estimated, and then submit amended return once you have correct info. 

 

 

 

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Replying to garyturner:
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By HelenG
09th Feb 2012 14:28

Thanks for your reply. Luckily not late as the request to complete a tax return only came through 30th November so under 3 month rule have until end of February to submit it.

Client is not very forthcoming with the info but I will try again. As you say, it's better to submit something and then correct it later as I don't think any extra tax will be payable due to DTR.

With regards to his residence, I was originally going to claim split year treatment but he was in the UK for about 300 days in 2010/11 and actually moved here on 4th April 2010, just before he got married so I didn't think this was possible and that he would count as resident for the entire year. But please correct me if I have misinterpreted this

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