Self-assessment - Living outside of UK but earning from UK business

justaddice

I have not been present for the whole of the 2011-12 tax year. I already submitted P109 to indicate this. I also submitted my P85 in 2007 when I first left UK. Since that time I have been classed as non-resident by HMRC (i.e. I haven't been in UK for more than 6 months for each financial year).

I am working from outside of the UK, however I am registered for self-assessment. The work I do is for UK individuals/small-businesses and they pay my UK bank. I was not present in the UK to do any of this work.

To add to the complication, I can not pay any local tax in the country I am currently residing. I've been on tourist visas while travelling and have done so for the past 5 years.
My clients have mostly been UK based and I've never had any business from the counties that I've travelled to.

I wasn't sure if I need to declare these earnings on my tax return. I called HMRC a few times and explained as I have here. The first time they said I only need to declare my bank interest.

The 2nd time I called they said I should declare these earnings, and also submit the P109. I submitted my P109, and now I am looking to declare these earnings. However, I am still confused if I should pay the UK tax on these earnings.

I recently tried to make these amendments in the online self-assessment. I added the earnings to the 'net profit' field (previously blank). It then calculates that I will owe thousands of pounds.

Basically I am confused on what I would have to pay. Would I need to pay this figure that the online assessment splits out, or will this get reviewed with regard to my P109?

Currently I didn't submit my amendment and thought I should get advise first.


Thanks for any guidance and help.

antrobus

If you're resident in another country and conducting a business there, then the profits from that business will be taxable in that country. The fact that all your customers are UK based is neither here nor there. The fact that that you might (or might not be) contravening the terms of your tourist visa would not of itself have any impact on the tax position; it would just mean that (as far as your country of residence was concerned) that you were guilty of another offence in addition to tax evasion.

But that's just the opinion of some random stranger off the internet.

Cook_County

There is a good argument from what you say that someone in this situation is still UK resident as by definition such an individual has not settled permanently elsewhere. If so, someone in this position might be taxable by the UK on worldwide income and gains.

It is quite easy to find Brits in China using the Internet. This is a random example: http://www.bjstuff.com/profile/Danny83. It would be surprising therefore to find anyone in China posting publicly that he or she had commited immigration offences.

Tax evasion in China is doubtless equally not recommended. It is conceivable that someone in this situation owes tax both in China and the UK.

justaddice

Thanks for the feedback

Cook_County, yes that's me, and yes its public, and yes its possible to search for keywords using google. I don't appreciate that you made a physical link between this post and some random site that I used in the past, but anyone can do this if they can be bothered.

However I think you crossed the line when you stated that I posted that I admitted committing an immigration offence. If you'd like to link to the relevant Chinese law then that might be a better use of your time. You'll find that in Chinese law it states I can't work for any Chinese business without a work permit. In my case I think it would be a bit premature to state that I have committed any offence.

Let me clarify that I don't believe I have evaded tax, and absolutely don't intend to. I have posted on this forum in the past that I am happy to pay relevant tax if tax is due. By posting and asking questions here I am seeking to find out what I correctly owe. Sure if I wanted to evade tax I wouldn't be so high-profile with public posts, such as these and others.

By the way I am seeking professional consultant and accountant advice, which should indicate I am looking into the problem seriously. I am guilty however for trying to seek friendly free advice from experts on this site first, and getting back blind false accusations.


Anyway, getting back on topic. My confusion came when HMRC said I am not classed a UK resident for tax purposes. However considering I am not classed as a resident anywhere for tax purposes I am not sure who I should pay or if tax is due.

If anyone can help with any friendly advice, then it might restore my faith in this site.

Thank you,
Daniel.

Cook_County

From the data you have provided so far you are still UK resident and therefore subject to UK tax on worldwide income.

However because you are physically doing the work in China, China has primary taxing rights. Therefore you would pay in China whatever Chinese tax you owe and claim that as a credit on your UK tax returns, so you do not end up doubly taxed. If Chinese tax is higher than UK tax you will owe nothing to the UK, but would still need to file in both jurisdictions.

tyllwyd

I'm confused - what address do you put on your invoices? If you have been doing this for several years, what did you do in previous years? Are you a sole trader? Would it not be better to set up a UK ltd company, then the tax position would be much easier to establish?

pjclar02

Cook_County wrote: »

From the data you have provided so far you are still UK resident and therefore subject to UK tax on worldwide income.

It is highly improbable that one can establish whether the OP remains UK tax resident on the basis of the information provided in this thread alone.

Determination of residence will be based on the specific facts and the only facts I can see in the thread are that:

a) The OP left the UK at some point in 2007. We don't know the exact date, or whether he left the UK to work full time abroad;
b) The OP has been back to the UK for less than 6 months each financial year. This could be anything from nil to 182 days.

In order to determine whether it is likely that HMRC will consider the OP to be UK tax resident we will need to know:

a) The precise date he left the UK;
b) For what purposes he left;
c) How many days in each tax year he has been back to the UK. What are the return visits for
d) Does he have a home in the UK? If so, what happens to the home when he is out of the UK;
e) Does he have any family or friends in the UK;
f) Does he have other business interests in the UK;
g) Has any of the time spent in the UK been used or visiting the UK customers or otherwise carrying out work for them

There will be other questions, and in all likelihood the answer to the above will give rise to further still. At which point a more informed, but not necessarily conclusive, opinion of the OP's residency status can be determined.