A client is ordinarily resident in the UK and is engaged by a company based in a non-EU country to sail around the world
He is spending a little over 6 months on board various ships and the remainder of the year in the UK.
The engager has told my client that they have no UK presence whatsoever and my client is being paid gross
My reading of PAYE 81610 (http://www.hmrc.gov.uk/manuals/pommanual/paye81610.htm) is that if there is no UK presence then there is no UK PAYE due
If there is no UK PAYE then should the income treated as foreign income for UK tax purposes?
I should therefore complete the Residence, remittance basis etc pages entering the gross amount received in box 31. This would then be taxed at usual UK rates and no NI due
Many thanks
Martin
NB I am aware of the rules regarding Seafarers Deduction, for the sake of this query please ignore it
Replies (2)
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DIY PAYE
On the basis that the duties are performed in the UK your client needs to set up a "personal" PAYE scheme and operate it himself. These schemes operate just like a normal PAYE scheme but with no Ers NIC and only one employee.
Strictly they don't need to file a P35 but we always do for these to avoid the argument/penalties/hassle that always ensue when we don't
Self-employed?
Your use of "engaged" and "engager" suggests that the foreign company is not taking on your client as an employee, but under a self-employed contract for services. As the client is only out of the UK for 6 months, he will remain resident in the UK for tax purposes.
If he is treated as an employee, I agree that he will need a direct payment PAYE scheme DPNI.