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switching to remittance basis

amending tax return

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self eomployed new client already written to HMRC to switch to Remittance Basis (RB) an amend TR before seeking advise.  I have looked at his TR and noted (obviously) they have not decalred any foreign income nor have they remitted any income to the UK. So there are only few options here . 

option 1 - amend return under arising basis, tax will be higher as undeclared income will now be included and taxed in UK  

option 2 - amend return under RB basis , as there is no income remitted to the UK , so this will makes tax  higher as PA will be lost. 

option 3 - do nothing - can be dangerous if an enquiry is opened or error is found. 

option 4 - amend retrun and include Double taxation relief , no better than option 1. 

No RBC applies and return is within 4 yrs time limit and income under 100K. 

Any possible thoughts to make this idea more appealing, i have not done one of these for a long time. I will surely do some reseach this weekend , but just reaching out  on a brainstoming exercise.  

Replies (7)

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By sarahg
05th Nov 2021 13:53

Well now that you know there is an issue, option 3 is not an option is it.

So you need to look at 1 or 2 - obv this will depend on the clients individual circumstances, it's not just about the tax owed

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By Paul Crowley
05th Nov 2021 14:21

Would this be a new client that did his own returns until getting a letter from HMRC?
If so, then once sorted he is likely to be a former client
Cost in your research time

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Replying to Paul Crowley:
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By Iamalwaysonamission
05th Nov 2021 15:26

Sure - they have been doing it themselves , and someone told them about the RB and they wrote to HMRC.

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By Tax Dragon
05th Nov 2021 15:05

If the foreign income hasn't been declared, how can you tell by looking at the tax returns whether it was remitted?

Have a read of https://www.gov.uk/guidance/offshore-disclosure-facilities as a starting point. You will have lots more reading to do, so Paul's point is well made. (And +1 to sarahg too.)

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Replying to Tax Dragon:
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By Iamalwaysonamission
05th Nov 2021 15:32

thanks for your comment , i found out about the unremitted income through initial conversation. its an obvious question to ask.

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Replying to Iamalwaysonamission:
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By Tax Dragon
05th Nov 2021 16:10

Perhaps I should have started my post thus:

Iamalwaysonamission wrote:

I have looked at his TR and noted (obviously) they have not decalred any foreign income nor have they remitted any income to the UK

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Replying to Tax Dragon:
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By Iamalwaysonamission
05th Nov 2021 16:22

Apologies for not being clearer.

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