NT code - split year?

sheramber

My son works in Romania for a UK company and is paid in the UK into his UK bank account.

He has property which is mortgaged in the UK which he uses from time to time so presumably is not 'non resident'.

He has been granted NT code by HMRC from October 2016 as he is liable to pay tax in Romania.

He still pays NIC.

However he has already had UK tax deducted from October to April which he is trying to claim back completing a tax return and SA109.

To complete the SA109 does he qualify for split year treatment due to NT code from October?

jimmo

In your son's circumstances code NT is issued (on a provisional basis) if HMRC believes he is non-resident from the date of departure.
https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye81665

That seems to be at odds with what you have said about his residence status.
I have no experience of the new(ish) residence procedures so won't comment on that but, just from reading the following, it seems to me that split year treatment does apply.
https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye81670

sheramber

This is the confusion as all questions relating to leaving the UK do not apply to him as he is not 'non resident' as such since he still has property which he uses regularly on holiday or when visiting the UK office.

he has an NT code to avoid having to reclaim tax under the double taxation agreement each year. Although he does not receive any salary in Romania he has to pay Romanian tax on all his income after he has been in the country for 6 months, which was October2016.

HMRC have said to complete SA return and SA109.

But he has to know which section he has to complete. HMRC were not forthcoming when he asked them.

From what I have read I think split treatment does apply but trying to confirm it.

I will have a read of the link you provided , thanks.

madgagoo

Just having a Uk property does not necessarily make him UK resident. You need to look at the statutory residence test (look up RDR3).

If he is UK resident then he needs to consider the UK/Romania double tax treaty and see which country has the right to tax his salary. If he is UK resident then the NT code is probably incorrect.

You may be better off paying for some professional advice, rather than trying to DIY here! Penalties from HMRC could be severe, if you get it wrong and he underpays tax as a result.

jimmo

You seem to be a little confused. Split year treatment can only apply where there is a change of residence status. You are saying that your son remains resident in the UK and, if you are right, there cannot possibly be a split year. In my working days, local Tax Offices were authorised to accept non-residence status if all the answers on form P85 fitted. Otherwise the decision was made by specialists.
By issuing an NT code HMRC appear to have accepted, on a provisional basis, that your son has become non-resident.
So, if you are right split year treatment cannot apply. If HMRC are right split year treatment does apply.
Whilst I don't want to comment on your son's residence status I wonder whether you are confusing property ownership with having a home. The following link indicates that if your only home is in the UK then you are resident in the UK. It is perfectly possible for a person to own a house and it not be his home, or not his only home.
https://www.gov.uk/tax-foreign-income/residence

sheramber

As madgagoo says NT code is appropriate as he is liable to tax in Romania which I said in the first post.

He is resident according to the 'ties' test so the non residence pages were confusing.

I have now found the PAYE instructions for issuing NT code in such cases.
https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye81715

The problem is how to claim this for part of the year on SA return.

I have now found the forms for claiming Dual Residency from October which will give him the appropriate result.

His company is arranging for the company accountants to deal with this as there are ramifications in Romania for them as well. Uunfortunately they are in the process of changing accountants so this has stalled at the moment.

I am trying to help him complete an estimated return to meet the filing date until new accountants take over.