Share this content

He has moved to the Philippines !

run away to the Philippines

Didn't find your answer?

I have a client - husband and wife who moved to the Phillipines In late January 2020 - Hence why i am late doing his tax return (I have not seen or heard from him until recently)

At the moment I am doing his 2019/20 return for which he was non resident - although split year treatment might be available as he was in the UK for less than 16 days in 2020/21 - I just need to ask him if he ceased to have a UK home in the year.

His income is all property and trade (hotel) - I have been mulling it over and am I correct in thinking that all of this income will still need to be put on his UK tax returns as it is income arising from a source in the UK.

He should in theory now be submitting a return in the phillipines (unlikely!) if he is paying tax abroad I can claim double tax relief.

Sorry if I have rambled - I am hoping someone will either tell me the above is complete nonsense or I am on the right track

Jonathan 

 

 

 

 

Replies (21)

Please login or register to join the discussion.

Scooby
By gainsborough
04th Aug 2021 15:36

OK - so check RDRM12000 Cases 1-3 to see if split year treatment applies to 2019/20.

If he was in the UK for less than 16 days in 2020/21, he will be auto non UK resident.

Then check the UK-Philippines DTT to see how the rental and trade income is treated.

You also need to think about how long he is abroad for (temp NR CGT rules etc, reporting of residential gains), whether to apply to have rental income received gross, whether his wife owns any share of the UK property or business.

Thanks (1)
Caroline
By accountantccole
04th Aug 2021 17:11

UK rental income will always need to be declared in the UK
Is the hotel trade a sole trade? Presumably someone else is running it?
Again as property related I would expect it to be declared in the UK.

If it is a company and they are taking dividends, then non resident calcs will be different and the disregard rules may apply.

I'd want to understand Phillipines rules - if work is being done remotely, admin, accounts, marketing, compliance etc, there may also be a deemed trade in the Phillipines that needs to be addressed.

If he is now resident in Phillipines you would only declare UK income so there shouldn't be any double tax relief on the UK return.
He would presumably get relief for UK tax paid on his Phillipines return?

Thanks (1)
Replying to accountantccole:
avatar
By jonibarnes
04th Aug 2021 18:07

Thanks for the input , it’s a partnership- both in Philippines. I have advised him to get tax advice from some one in Philippines re tax abroad.

He doesn’t do a lot from abroad, I’ve actually mislead in the original question - it was a hotel but when he moved he switched to fhl so he has a letting agent in the uk do most of the work.

I think I’m on the right track with my train of thought

Thanks all

Thanks (1)
Replying to jonibarnes:
avatar
By Tax Dragon
04th Aug 2021 18:35

Cessation? So are there balancing charges? Lots of fun.

NRLS. I wonder how many people have accidentally become non-resident landlords as a result of lockdowns. It's a different test - nothing to do with SRT.

Thanks (1)
Replying to jonibarnes:
avatar
By Wanderer
05th Aug 2021 02:57

jonibarnes wrote:

I think I’m on the right track with my train of thought

Based on what has been said so far, for the UK return(s), I'd say:-
Trade (partnership) up to date of cessation.
Partnership return as well as personal returns required.
FHL thereafter.
All on UK tax return(s).
Split year treatment unlikely to affect the figures.
Credit for any tax deducted by letting agent under NRLS.
Any tax paid abroad on these unlikely to be relevant & no DTR on UK return.
Thanks (1)
Replying to Wanderer:
avatar
By Tax Dragon
05th Aug 2021 07:22

I wonder several things here. Including... Why have the runaways made contact now? Where they lived before they ran. Whether there were any hotel-to-FHL conversion costs. Maybe I'm still a bit green behind the ears, but this last strikes me as an unusual conversion with, potentially, interesting things to think about, taxwise.

Thanks (1)
Replying to Tax Dragon:
Avatar
By I'msorryIhaven'taclue
05th Aug 2021 10:00

It makes you wonder why the accounting profession hasn't better organised itself into a networking and referral system, the way the medical and property professionals have. (Perhaps the medical profession provide the clearest and most ethical example of this, for example when your GP suspects Filipino [***]-ache and refers you on to a [***]-ache specialist. Property professionals are muddier waters: the chartered surveyor who undertook our house survey advised us there was evidence of damp, and recommended a specialist survey; the specialist surveyor recommended a specialist structural survey. Gee, thanks chaps!)

Maybe it's time us GPs learned how to refer on the sort of client the OP has landed, instead of feeling obliged to field such niche matters when it would arguably make better sense to disengage.

Thanks (2)
Replying to I'msorryIhaven'taclue:
avatar
By Tax Dragon
05th Aug 2021 15:54

There's insight and truth in that comment.

Thanks (1)
Replying to Tax Dragon:
Avatar
By I'msorryIhaven'taclue
05th Aug 2021 20:52

D'you know, the sprogs each underwent a course at their Universities entitled Ethics (or words to that effect) which amongst other things taught them not to bite off more than they could chew ("do not undertake tasks outside of your capabilities" and similar such pearls of wisdom). That was (in chronological order): teaching, engineering, and nursing.

Time for a similar approach in accountancy and taxation? Maybe with an Assertiveness course thrown in for good measure!

Thanks (0)
Replying to Tax Dragon:
avatar
By Hugo Fair
05th Aug 2021 12:39

Well, adherence to the new model TD (only answer OP's precise question on the facts provided) didn't last long!
Hardly surprising given the combination of intelligence/experience with more than a smidgen of curiosity that is as much a requirement of our profession as it is for a detective ... but good to see it escaping the bounds of proceduralism from time to time. :-)

Thanks (1)
Replying to Hugo Fair:
avatar
By Tax Dragon
05th Aug 2021 15:56

Variety is the spice of life.

I think I'm perhaps a little less inconsistent though than you give me credit for?

Thanks (0)
Replying to Tax Dragon:
Avatar
By I'msorryIhaven'taclue
05th Aug 2021 21:06

Tax Dragon wrote:

Variety is the spice of life.

.. that gives it all its flavour.
(Is that an idiom? I'm never quite sure.) And ought that full stop be outside the closing bracket? Arghhh... woe is me!

Tax Dragon wrote:

I think I'm perhaps a little less inconsistent though than you give me credit for?

So you're more consistent? Doh! My latent OCD is gettin' the better of me!

Thanks (0)
Replying to Tax Dragon:
avatar
By Hugo Fair
05th Aug 2021 21:26

Aside of my comment only being meant as a friendly wisecrack ... I quite agree with the desirability of variety - hence my acclamation for "escaping the bounds of proceduralism from time to time" (which by definition must involve variety).
As a senior 'expert' once explained to me when taking on a job outside his normal remit, "I need to escape the fur-lined rut from time to time"!

Anyway, I never doubted you being "less inconsistent" (i.e. more consistent) in general ... but was praising your occasional diversion from that path - as at your post on 05th Aug 2021 07:22

Thanks (1)
Replying to jonibarnes:
avatar
By Moo
10th Aug 2021 16:14

You can be on the right track and still be out of your depth which I think is the case here.

Thanks (1)
Replying to Moo:
avatar
By jonibarnes
10th Aug 2021 16:26

lolz

Thanks (0)
avatar
By AndyC555
05th Aug 2021 10:10

Make filing any tax returns dependent on him paying your fee.

Thanks (1)
DougScott
By Dougscott
06th Aug 2021 09:19

Yes is the simple answer. UK Property Income is taxable here and will need a Tax Return here. Obviously you need to set out residency status on tax return. The client will benefit from the usual personal tax allowances against income. You have alteady advised him to seek professional advice re his tax situation in the Phillipines.

Thanks (0)
Replying to Dougscott:
avatar
By Moo
10th Aug 2021 16:18

'The client will benefit from the usual personal tax allowances against income. '
On what basis? Are you assuming clients are UK (or other relevant) nationals? What if they are Phillipine nationals returning home?

Thanks (0)
avatar
By Rgab1947
06th Aug 2021 09:59

Property income is taxable in UK irrespective where resident.

Trade (hotel) is UK earned so must be declared.

You can be tax resident in two jurisdictions. You need to check the residency rules. I would certainly think he is tax resident in Phillipines so needs to do a tax return under Phillipine rules.

is there a DTA in place? If so wont be double taxed as such. But check the wording.

As not in resident in UK but tax resident the trade if sole trader may not be taxed in UK. But check HMRC manuals as a hotel (Don't do hotels at all)

Thanks (0)
By tonyaustin
06th Aug 2021 12:13

If clients did not leave the UK until January 2020, they are resident in UK for 2019/20 having spent more than 183 days in UK in that year. Split year may apply to treat them as NR from date of departure, depending on why they left. Income arising in UK is subject to UK tax even if NR. No double tax relief in UK if NR, depending on Double Tax Agreement, there may be relied in Phillipines if UK income taxable there.

Thanks (0)
avatar
By jonibarnes
10th Aug 2021 16:32

This proved a popular post ! - thanks all for taking the time to reply - I am happy with the job and confident in my ability to complete the return.

If I wasn't confident I would have no hesitation in telling the client, I have plenty of work and am in a position where I am happy to refer people on if I am not confident in my knowledge or if I think someone else could do a better job.

Thanks (1)
Share this content