Self Employed to Non Resident Tax

jimmo

ARM10 wrote: »

If the company's intention to treat me as self-employed is questionable, and they are evading (their) PAYE obligations - that is their tax responsibility and not mine, correct ? So for the purposes of this discussion I suppose I don't need to be concerned ?

Absolutely. The company is taking all the risks tax wise but if they get caught out by the taxman you may find that they expect you to help them out.
From a personal point of view, you could pay a month’s National Insurance as a self -employed person (Class 2 NIC) for the sake of your entitlement to State Pension but whether that is worthwhile to you seems doubtful.
Coming back to the residence issue, you will be leaving the UK to take up employment abroad in May 2012 and, in its simplest form, you will need to stay in employment abroad and not even visit the UK until after 5 April 2014, thus achieving a complete tax year’s absence from the UK before you break your current status of resident.
It is only once you have broken your resident status and become non-resident that you can contemplate visiting the UK.
Until you break your current resident status, “merely incidental” doesn’t exist.

ARM10

jimmo wrote: »

Absolutely. The company is taking all the risks tax wise but if they get caught out by the taxman you may find that they expect you to help them out.
From a personal point of view, you could pay a month’s National Insurance as a self -employed person (Class 2 NIC) for the sake of your entitlement to State Pension but whether that is worthwhile to you seems doubtful.
Coming back to the residence issue, you will be leaving the UK to take up employment abroad in May 2012 and, in its simplest form, you will need to stay in employment abroad and not even visit the UK until after 5 April 2014, thus achieving a complete tax year’s absence from the UK before you break your current status of resident.
It is only once you have broken your resident status and become non-resident that you can contemplate visiting the UK.
Until you break your current resident status, “merely incidental” doesn’t exist.

Great! Thanks for the advice. I'm just looking at "Residence, domicile and the remittance basis" HMRC6 guidance, section titled "8.5 Leaving the UK to work abroad as an employee", Example 1 on page 47. With the exception of the self-employed issue, which we've established doesn't affect residency rules, it's similar to my case. It implies I'll be resident in the UK for 2012-2013 (same as what you suggested) but allows visits to the UK later in the same FY, and I will subsequently be not resident for 2013-2014.

The examples don't seem to suggest I need to be outside the UK for the FULL tax year in any year after I leave the UK to break residency rules ?? :think:

So for FY 2012-2013, I would be dual resident in the UK and the destination country, but as a result of the 'tiebreaker' double taxation rules, tax liability would fall to the destination country anyway :question:

jimmo

I did say “the simplest way“.
HMRC 6 came out after I retired from HMRC. I have to say I have not studied it in its entirety and have no intention of doing so because it doesn’t affect me.
However, even pre HMRC 6, conventional wisdom was that for those moving abroad to work a clean break of a complete absence from the UK for a complete tax year was the safest option.
Certainly in my days at what is now HMRC if you made the clean break your normal tax office could handle your tax affairs without referring to the specialists in residency matters and that really was the simple solution.
I have taken a look at example 1 on page 47 of HMRC 6 and see that it considers 4 separate Income Tax years. So from that example, fair enough, you can make incidental visits to the UK in the tax year that you emigrate so long as you are going to continue to live abroad for at least 4 years and keep below the threshold for average annual visits to the UK. However, whether we understand it or not, there has to be a reason why HMRC 6 uses an example covering 4 tax years.
So, if you move abroad in 2012 and make incidental visits to the UK in 2012 and 2013 but move back permanently to the UK in 2014 what will be your average number of days spent in the UK in 2012, 2013, 2014 and 2015?
I wont even pretend to have an answer for that but I am confident that if you make the break and stay out of the UK, working, for a complete tax year, you will be able to return as and when it suits.
If you enter into the “averaging” regime I think you are playing with fire and would certainly be beyond the stage where I could offer positive help.

ARM10

jimmo wrote: »

I did say “the simplest way“.
HMRC 6 came out after I retired from HMRC. I have to say I have not studied it in its entirety and have no intention of doing so because it doesn’t affect me.
However, even pre HMRC 6, conventional wisdom was that for those moving abroad to work a clean break of a complete absence from the UK for a complete tax year was the safest option.
Certainly in my days at what is now HMRC if you made the clean break your normal tax office could handle your tax affairs without referring to the specialists in residency matters and that really was the simple solution.
I have taken a look at example 1 on page 47 of HMRC 6 and see that it considers 4 separate Income Tax years. So from that example, fair enough, you can make incidental visits to the UK in the tax year that you emigrate so long as you are going to continue to live abroad for at least 4 years and keep below the threshold for average annual visits to the UK. However, whether we understand it or not, there has to be a reason why HMRC 6 uses an example covering 4 tax years.
So, if you move abroad in 2012 and make incidental visits to the UK in 2012 and 2013 but move back permanently to the UK in 2014 what will be your average number of days spent in the UK in 2012, 2013, 2014 and 2015?
I wont even pretend to have an answer for that but I am confident that if you make the break and stay out of the UK, working, for a complete tax year, you will be able to return as and when it suits.
If you enter into the “averaging” regime I think you are playing with fire and would certainly be beyond the stage where I could offer positive help.

Thanks again for your help, it's much appreciated! I have a much better understanding of the situation and will bring this to the attention of the company as well