I think I have a client who is genuinely not liable for tax anywhere.
They are a peripatetic sportsman.
Anyone care to comment or give me any warnings ?
Their turnover is about £50k.
Their profit is about £20k.
They are a downhill biker.
They are sponsored by a german company.
The german company provides bikes and sponsorship to ride the bikes.
Occasionally my client wins a race, or gets on the podium.
They receive prize money. The prize money is sometimes taxed.
My client is about 25 years old.
Originally from the Uk, they now travel the world.
They are not resident in any one place more than two months of the year.
They have a mum and dad in the Uk, and a girlfriend in Greece.
The rest of the year they travel the world at competitions, Thailand, Australia, Canada, all around the world.
I have rung the HMRC Technical Helpline and examined the 'Residency' sheets.
The Uk tax office agrees with me my client is not taxable in the Uk.
Any comments or warnings ? !
Thank you.
Peterg
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https://www.wealthprotectionreport.co.uk/public/107.cfm
Also isn't their something about the 'source basis' for sports people? (No personal knowledge so take this with a pinch of salt.)
Thankyou Wanderer, great steer.
Yep, still think he is of no fixed abode !
Thanks for the hints/checks.
If they don't come to the UK, then they probably could meet an automatic non-resident test.
Which seems to trump the old test that to lose you residence in the UK, you had to gain it elsewhere.
You're not concerned with DTAs as they deal only with residents. (Even if your lad is resident somewhere, most DTAs have specific provision for sportspersons, allowing countries to tax things that happen in those countries.)
Activities performed in the UK would, I think, be taxable in the UK. There is even provision for deduction of tax at source (Ch18 Pt15 ITA2007). Can't speak for other countries, but you'd expect they might want to do similarly – especially since the DTAs allow them to, so the issue has been thought of.
This is presumably the "source" point that Wanderer makes, though, like Wanderer – and by the sound if it like you – it's not my field of expertise. I guess my warning is: be aware that there may be specific rules in specific territories and applying general principles won't always give you the right answer.
Thankyou Tax Dragon
I could not find a 'Residency' or 'International' category for this post so the Double-Taxation seems the nearest thing.
My guy is relatively low-income, profits round about £20k pa, but his tax situation is similar to high-flyers I think.
Some of his winnings are taxed at source in the countries he competes in. The interesting bit is it is similar to Usain Bolt who did NOT come to compete in the Uk due to the tax he'd have to pay on his performance fee.
So, an intellectually interesting part of this is that the "ambassador" service my client provides might be 'delivered' in a third country, eg Canada or Thailand, for the brand sponsor, which is based in Germany, yet my guy doesn't quite live anywhere long enough to be resident …. !
So trying to do a complex tax analysis for a relatively small client.
I am getting more of these odd international examples for self-assessments too since there are quite a few Europeans working in the Uk, admittedly not sportspeople or performers, but still quite complicated international tax rules for small profits sometimes.
Thankyou for the input.
Thanks Tax Dragon and all again.
From your guys hints it seems that in the UK my chap is court by 'visiting performers' regs in ITTOIA 2005 Chapter 2 Sections 13 & 14.
Presumably every single country he "performs" in will have similar regs …..
Thanks Carmores
I think the getout for my client here is that if he total income is only £20k worldwide, his Uk income pro-rata income is going to be within his tax-free band. As will (most likely) be the same in other jurisdictions.
He might even qualify for a rebate if he has been pre-taxed!
Just wanted to add this fits perfectly and makes sense.
Just need to check all the other countries he performs in now (!).
Thankyou
Peterg
I can't help much...but do recall there being loads on the news about Ussain Bolt and tax a few years back. Obvs his earnings will have been a bit higher than your client so more high profile.
See here https://www.telegraph.co.uk/finance/personalfinance/tax/9475125/Usain-Bo...
Thanks Maslins that was a useful link.
I had him in mind too, but realise why Usain won't run now, HMRC want to tax he sponsorship deals as well as his appearance fee so he could actually lose money by running!
Yes very relevant but my chap is just a minnow !
Great comments everyone.
As he is probably liable to be taxed in every country he performs in he has the expense of reducing that tax by making expenditure claims in each of those countries.
How is he going to fund his retirement, sickness etc?
As I understand it he has to be resident somewhere for tax purposes. Those before me have a much better idea of the rules.
I would suggest that you need to look to see which country fits the most. If he gets support from sports bodies is it a requirement that he is tax resident in those countries...
He may earn£20k now but in the future it could be a lot more may be £100k so you also need to look ahead whilst helping him through this nightmare
Not quite sure that is true Paul that he needs to be resident somewhere .. although that law may be around the corner. I think the truth is nearer the 'nightmare' of international regulation spaghetti you suggest!
The downsides are not having tax returns and SA302s for a mortgage - but client aware ..
Is your engagement limited to providing UK tax advice or is your client expecting you to advise him on his worldwide tax position? You say that you are "getting more of these odd international examples", so I would seek specialist advice from a tax professional who deals with residency, sportsmen, withholding tax, etc. so that you can ensure that you haven't missed something.
Had a similar situation. Divorced guy in IT consultancy. Clients in Canada, company in UK and he was not tax resident in the UK (defined) but also not in any other country as he never stayed longer than a few months but as his work all done on his laptop and phone could work from his hotel or his friends bedrooms.
Never managed to make him tax resident in any country. Sent in UK tax returns as he had an NI number but that was to cover him if HMRC got nasty. So in my view he was in the clear.
Fortunately got involved with a high flyer girlfriend in UK so now UK resident. Whew!
Interesting topic and likely to become more common. Search for "Digital Nomads" if interested.
