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Tax residence

Tax residence

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Dear All,
I received a query from one of my client for which I do not have any answer, following is the question and scenario.
He now works outside the uk permanently whilst still being employed by a uk company. He live in Thailand but remain resident of the UK, i.e still paying income tax and nat ins. I managed to get his tax code changed to NT in April 2013
My client had a look at paying tax in Thailand and what is required. He has not been paying British tax since April 2013 and He has been back in the UK no more than 2 weeks this year.
With his job he gets sent anywhere abroad for length of time and its never more than 3 months in any country. Apparently to pay tax in Thailand he needs to be there more than 180 days earning , i think this applies in most countries. (correct me if I'm wrong )
Basically he was never in a place for too long, He works for few weeks/month and go back to Thailand in-between projects. He has a holiday apartment that he rents there long term. 
Ideally He wanted to go on the Thai system and pay their tax, but they make it difficult for someone in his position . There is a lot things that i would need do first like long term visa, work permit, residency in Thai etc… 
It would be much appreciated for your time and any comments
Thank you .

Replies (7)

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By The Innkeeper
04th Dec 2013 16:34

In cases like this

I ALWAYS advise the client to take advice from a suitably qualified individual in the local jurisdiction. For you to get involved in giving advice for the overseas matters will be a recipe for disaster

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By frustratedwithhmrc
05th Dec 2013 03:00

Being out of the UK isn't sufficient

He needs to be able to prove that his residence in Thailand is a settled one, he should speak to a local Thai accountant to become tax resident in Thailand.

My primary concern here would be that by only having weak ties to Thailand, HMRC could argue that he has not moved there for a settled purpose, as it's effectively a holiday home for when he is not working.

Does he have a Thai residence visa?

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Replying to Locutus:
By raviraval
16th Dec 2013 09:45


I need to ask him about Visa status as I am unsure about his status.


but as I described in my question he is going to apply for longer term visa so I guess currently he must be holding temporary visa.

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By paras007
05th Dec 2013 11:27

Get advice

" I managed to get his tax code changed to NT in April 2013"

If you don't know what you are doing, why/how do the above?

I would extend The Innkeeper's suggestion and advise you to get proper advice in the UK as well from somebody who knows what they are doing.

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Replying to DJKL:
By raviraval
16th Dec 2013 09:15

Dear Para,


1st I do not know what I am doing that's why I asked for your advice.

2nd I took advice from HMRC on his ta position and they did changed his tax code to NT (advised by HMRC).


Thanks for you advice though. 


Much appreciated!!


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By Jim100
05th Dec 2013 12:22

Got to pay tax somewhere


Tax deduction is dependent on Article 16 - Dependent Personal Services is where is the employer taking a tax deduction for Corporation Tax.   The employer cannot take a tax deduction if they are not withholding the taxes and paying this to the tax authorities  on behalf of the employee as this goes against the Double Tax Treaty.  I think this is the main question to ask where is the employer taking the tax deduction

You will need to check the double tax treaty between UK and Thailand (article 4) to establish residency as he could be considered as resident in more than one country. Often know as the tie breaker.   Home is the number one criteria and since he is there the longest and has a contract to rent a home in Thailand he probably has to pay taxes in Thailand.

Furthermore, his employer should be taking care of the taxes side not him unless he is a subcontractor.  The employer then can benefit from the Corporation Tax deduction and ensure compliance with the tax authorities.   Why did you get the tax code - employer should have got one for him.  Employer can also consider a tax equalisation model to ensure he is no better or worse off due to the taxes and social security.  There are other considerations too but that is for another day.



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Replying to John Stokdyk:
By raviraval
16th Dec 2013 09:38


Dear Jim,


First of all I would like to thank you for your time and most appreciable advice.


I got his tax code changed to NT only because HMRC advised me to do so. I have explained them this situation and they suggested that my client's payroll department is using the wrong code. He should be taxed in Thailand.


I never thought about the double tax treaty which affects to corporation tax as well. Thanks for showing me the different way of looking at this scenario and I will update you the outcome very soon :)



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