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Tax free or not

Tax free or not

I have read HMRC 6 Residence, domicile and the remittance basis and I have come to the conclusion that the income is exempt from UK tax, but I would appreciate the views of others, to ensure I have not missed or misinterpreted anything.

Notice to file a 2011/2012 tax return issued.

Client unsure if P85 completed will let me know tomorrow.

Client has never previously worked outside of UK, therefore domiciled, resident and ordinarily resident in UK

Facts - in Feb 2011 Electrician began working for an American contractor in Afghanistan. Contract states "duration - long term - 12 months" and then within the contract it states "employment is for an unspecified time period and can be terminated by either party at any time"

Salary, allowances and reimbursed expenses are all paid in dollars and the funds where paid direct into a UK bank account.

Client left UK for Croatia for training on 8/2/2011, then on 15/2/2011 flew to Dubai for onward flight to Afghanistan on 16/2/2011

Visits to UK where as follows:-

Arrived 19/5/2011 returned to Afghanistan 7/6/2011

Arrived 11/9/2011, went Rep of Ireland to get married on14/9/2011 returned to UK 20/9/2011 went to Portugal for honeymoon 21/9/2011 returned to UK 28/9/2011, returned to Afghanistan 1/10/2011.

Arrived 21/12/2011 went to Rep of Ireland 23/12/2011 returned to UK 2/1/2012 returned to Afghanistan 10/1/2012

Returned to UK 6/4/2012 after contract ceased.

I have calculated that total days home where 62 including trips to Rep of Ireland and honeymoon in Portugal.

I have based my conclusion on Ch 8.5 "leaving UK to work abroad as an employee" and based on this the client is not resident and not ordinarily resident for 2011/2012, then based on table 10.10.1 duties performed wholly outside the UK - not liable to UK Tax.

Have I missed anything? or been to simplistic in my approve?



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04th Jan 2013 10:37

Not breaking UK Residence

My view is that neither of the statements

"Contract states "duration - long term - 12 months" "

"employment is for an unspecified time period and can be terminated by either party at any time"

really help to satisfy the requirement under HMRC6 that the individual should be leaving to work abroad under a contract of employment for at least a whole tax year.

The individual would therefore not break residence under the Extra Statutory Concession that you are trying to rely upon and you would need to consider the other facts - presumably he will remain UK resident for 2011/12. There is also 2010/11 to consider as there is the Feb 2011 and March 2011 income that would also then fall to be taxable.

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04th Jan 2013 11:36


I agree he is unlikely to qualify for the ESC, but that is for split year treatment in the year of departure - i.e. he will be UK resident for 2010/11 despite leaving the country in February 2011.  Therefore worldwide income taxable, although some of the relocation costs etc will be exempt I suspect.

However, it does look like he was non-resident for the whole of 2011/12 - as he was outside the UK on a full-time contract of employment at both the start and the end of the tax year and visits to the UK were below the days limit, so he will only be taxable on UK income?

Resident in the UK from 6 April 2012 - i.e. for 2012/13.

Wouldn't take my view as gospel on this though.

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05th Jan 2013 09:06

Thank you for your input. I suspected the wording within the contract may be an issue, thats the reason I mentioned it.

Has anybody else had any cases similar to the one I have described?



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