Hi guys,
A client of mine moved to Australia mid-year.
The double taxation treaty would suggest (and so did HMRC advisor) that he should only report income up to the date he left on a tax return.
Seems simple, but... the income he receives is from amazon uk affiliate marketing programme, the website that generates sales is registered at .co.uk and the income is paid into UK bank account in GBP.
Do you think he can apply the split-year treatment in these situations? He's self-employed.
Thanks in advance,
Barbara
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Replies (6)
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Need more info, what is UK residency status?
What is Aus status?
What does double tax treaty say.
If it is considered a trade in the UK and he now performs that trade in Australia, is it a UK business or Australian one????
So glad someone replied!
Well, he's a British Citizen, spent about 186 days in a tax year in the UK and the rest in Australia. He doesn't plan to come back. Now, according to residency rules, he's British resident since he spent over 183 days in a country in that year, but I believe he would meet split year test 3 - You cease to have a home in the UK. That relaxes the rules and allows to split the tax year.
I read this, from p59 https://assets.publishing.service.gov.uk/government/uploads/system/uploa...
He owns a website generating commission from amazon uk, he still does it in Australia. The money he's paid is in £ and paid into UK bank. He's a sole trader. HMRC advised to simply use split year treatment and ignore the income after he left.
A website or hosted server is not a permanent establishment, nor is a bank account. If your client owns a physical server that is located in the UK, that may be a permanent establishment. However, a website is not tangible property and can't have a location, only the actual computer on which the software runs can do that. If your client has a hosted website (where the owner of the equipment may in fact store the data on any server farm anywhere in the world), he is now likely to be self-employed from Australia, even if he is selling into the UK market, and his income should be Australian, not UK. Have a good read of the OECD guidlines on what constitutes a PE: https://read.oecd-ilibrary.org/taxation/model-tax-convention-on-income-a....
Thanks mate, I'll have a read. I try to avoid international taxation, but this was a nice client with a straightforward business until he decided to turn his life around
Great, I have my answer.
Thank you a lot guys, I appreciate it!
I wasn't aware of OECD, I added it to my resources, might come useful in the future