Tax on Foreign Income - A Complicated Situation

UKMexicoResident

I've found myself in a rather complicated situation and need advice. Please help if you can.

Here are the basic facts:

• I am a British citizen currently living in Mexico as a temporary resident
• I have been living here since May 2014
• I never told the government that I was leaving England
• Between November 2014 and January 2016 I was employed by a Mexican company and paid tax here
• Since May 2016 I have been working for a US company (it is not registered in Mexico) as a "permanent contractor" - I.e. This company has not been deducting tax and I have been invoicing them each month for "editorial services".
• The income from that company has been paid into my UK account from the US each month (around £2K a month)
• I do not plan to move back to the UK, but want to continue using my personal current account as a place to receive funds.
• I do not have a registered company or a sole trader status.

My questions are:

1. Where should I be paying tax?
2. Am I liable for tax and NI in the UK?
3. What penalties should I expect to pay if the UK wants my tax money?
4. Should I set up a small UK business and can I back-pay tax if I set it up now?

Thank you so much for any advice you can offer...myself and some of my friends here doing similar things are extremely confused by what to do.

00ec25

where you remit the cash to does not dictate who has authority to tax you in your case given you have not been resident in the UK for over 4 years

ask a Mexican accountant to dig you out of your hole since for tax purposes you are now a Mexican, not British

antrobus

It's not complicated. It's very simple.

You are a Mexico tax resident. You need to contact the Mexican tax authorities and inform them you are self employed. You might find it easier to engage an accountant to handle this.

UKMexicoResident

00ec25 wrote: »

where you remit the cash to does not dictate who has authority to tax you in your case given you have not been resident in the UK for over 4 years

ask a Mexican accountant to dig you out of your hole since for tax purposes you are now a Mexican, not British

Thanks for clarifying that. Do you think it's worth informing the UK government of this fact? Will they expect proof of tax being paid abroad?

UKMexicoResident

antrobus wrote: »

It's not complicated. It's very simple.

You are a Mexico tax resident. You need to contact the Mexican tax authorities and inform them you are self employed. You might find it easier to engage an accountant to handle this.

Thank you for the advice. I'm glad it is simpler than I thought.

00ec25

UKMexicoResident wrote: »

Thanks for clarifying that. Do you think it's worth informing the UK government of this fact? Will they expect proof of tax being paid abroad?

no

the UK govt has no interest in the tax affairs of Mexicans any more than we have an interest in the tax affairs of Alaskan Eskimos selling whale blubber to the Japanese

https://www.gov.uk/government/publications/residence-domicile-and-remittance-basis-rules-uk-tax-liability/guidance-note-for-residence-domicile-and-the-remittance-basis-rdr1

UKMexicoResident

00ec25 wrote: »

no

the UK govt has no interest in the tax affairs of Mexicans any more than we have an interest in the tax affairs of Alaskan Eskimos selling whale blubber to the Japanese.

So even though I'm a British citizen and I have a few thousand £££ saved in a personal UK current account, gained from working abroad, you're saying that is not of any interest to the HMRC?

00ec25

UKMexicoResident wrote: »

So even though I'm a British citizen and I have a few thousand £££ saved in a personal UK current account, gained from working abroad, you're saying that is not of any interest to the HMRC?

read the link...

your only UK earnings would be interest paid if you get such in your savings account
As a UK citizen you retain the right to a personal allowance so your interest would have to be massive to incur aUK tax liability.

the rest of it (to repeat for the 3rd time), is not subject to UK tax since you are a Mexican resident earning income in the USA