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Self employed and non resident musician

Anything to declare?

Didn't find your answer?

I should probaly know the answer, and I THINK I do, but I should be grateful for some reassurance from more experienced people.

My client is an ex rock musician who receives royalties and also marks UK music examination papers. He has become non-resident (in Spain) and did not set foot in the UK in 2020/21. He worked remotely in Spain marking the UK exam papers and continued to receive payments for this and for royalties into his UK bank accout.

My view is that as no work was carried out in the UK, none of this income needs to be declared on his 2020/21 UK tax return. Am i right?

 

Replies (4)

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By Joe Alderson
23rd Aug 2021 14:14

I would agree with your view, he's non-resident and the duties of employment are carried out outside of the UK so any tax due on that income should be in Spain.

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By DKB-Sheffield
23rd Aug 2021 15:56

Hi

Not really an answer to the residence question but...

How were the payments for 'examiner remuneration' handled? Were they paid gross or under the "special arrangement"?

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Replying to DKB-Sheffield:
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By sirp2000
24th Aug 2021 11:53

The payments were made gross.

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By richard thomas
24th Aug 2021 11:07

I would agree with Joe Anderson that there is no liability to tax on the exam fees as ITEPA only applies to UK duties of an employment (and art 14 UK/Spain DTA would have that effect in any case).

The royalties may be different though. I assume that during the course of the client's profession royalties were included as trading profits. Now they would be taxed either as intellectual property income under Ch 2 Pt 5 ITTOIA or as post-cessation receipts of a trade (Ch 18 Pt 2). The rules in ITTOIA dealing with income chargeable under more than one Part are in s 575 ITTOIA and give priority to income taxed under Part 2 (trading) but only where the charge is under Ch 2. Post-cessation receipts fall to be charged under Ch 18 and in any case s 243(1) ITTOIA gives priority to any other charging section.

Thus the client is chargeable under Ch 2 Pt 5 but this is subject to the UK/Spain DTA which applies a 0% rate to the source country (UK here).

The only issue would be if tax has been deducted from the royalties under s 906 ITA 2007 (as it probably should have been unless arrangements were made with HMRC). A claim to recover any tax deducted at source can be made to HMRC.

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