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tax advice required please

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jimmy


Joined: 15/09/2008
Posts: 251

Message Posted:
15/04/2009 13:33

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Message 1 of 25 in Discussion

I have had some friends come over & they have brought some mail over for me & two of those are 100 fines for not filling in tax returns we didn't know we were still getting.



We were a partnership in the UK & we thought that as we are no longer running a business we would no longer get tax returns but it seems that either the accountant didn't tell HRMC or it was up to us to tell them. Either way I want to be straight with them but I'm wondering is there anything I should or shouldn't say ??



Basically we have taken a few years out from the UK so I'm not even sure what my status is.





Any advice much appreciated.



MarkVPiazza


Joined: 14/08/2008
Posts: 530

Message Posted:
15/04/2009 13:50

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Message 2 of 25 in Discussion

Unless you have become "tax domiciled" outside the UK (which you obviously haven't), you are still a UK taxpayer , and liable to pay tax on pensions,interest, dividends etc earned in the UK, TRNC and anywhere else you may receive money from



Mark



No1Doyen


Joined: 04/07/2008
Posts: 16617

Message Posted:
15/04/2009 13:58

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Message 3 of 25 in Discussion

Jimmy. If you receive pension income in the UK surely this is taxed 'at source' and therefore no further tax would be payable.



As Mark said the problem arises if you have other income - interest, dividends etc that push you over the annual allowance.



Lastly I assume the period in question is 2007-2008. Therefore you only have until July to get the return completed otherwise you'll incur another fine.



ROBnJO


Joined: 30/06/2008
Posts: 1289

Message Posted:
15/04/2009 14:12

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Message 4 of 25 in Discussion

jimmy,



When you stopped trading, was the Partnership Dissolved, or left Dormant?



If Dissolved, your Accnt should have informed HMRC with final accounts.



If Dormant, you would still be liable for Annual Returns, even if they showed all 'zeros'.

You are still subject to these fines even if you are losing money and file no Return on time.



As others have said, if you are still a UK resident you are required to declare any income.



Try speaking to your former Accountant first. If you can't, then do phone the HMRC, they can actually be quite helpful!



Rob



girne


Joined: 14/01/2009
Posts: 438

Message Posted:
15/04/2009 14:13

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Message 5 of 25 in Discussion

We had the same problem when we moved over out of a partnershıp. The tax office requested 700 pounds from us when l called them they saıd we should pay and and will get it back the next tax year which we did as this is when the balance of our tax returns now showed zero but ıt took a while to come through.



jimmy


Joined: 15/09/2008
Posts: 251

Message Posted:
15/04/2009 14:34

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Message 6 of 25 in Discussion

the business was dissolved & this is why I was surprised to get the fines. Never got the tax returns as when we left the UK we didn't have a forwarding address until recently & cos it's my brothers address then I want everything to be right.



On closer inspection the fines are to our individual names & not the business.



jimmy


Joined: 15/09/2008
Posts: 251

Message Posted:
15/04/2009 14:35

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Message 7 of 25 in Discussion

I have paid all my tax bills - I paid the last one on line in Jan 08 -



I think the fine is for late submittal of tax return I haven't had





Just read that they may want a slice of my TRNC interest - that would be painful.



I'll be back to 40% !!!!!



jimmy


Joined: 15/09/2008
Posts: 251

Message Posted:
15/04/2009 14:35

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Message 8 of 25 in Discussion

I'm not retired (42) but I just overlooked the tax return bit. I paid my accountant 1200 a year to sort those things & I just paid their bill & signed the forms etc. & paid the tax & vat when due. I just assumed that because I no longer have a business & not earning then they weren't interested in me. A bit naive of me on reflection.



The only income I have had since then in interest. I have had all my interest paid in the UK net of tax & wasn't going to bother claiming it back cos I was here but now they want 200 in fines ( wife & I ) I will do what I canto claim back the tax on the interest which I estimate will be approx 3k / 4k so I should get a nice surprise when all the figures & done. In theory.



Will they want about the interest here ??



guinness


Joined: 10/03/2008
Posts: 224

Message Posted:
15/04/2009 14:53

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Message 9 of 25 in Discussion

There is a dedicated tax office for expatriates located at Bootle. When leaving the country to live abroad for more than one full tax year, then you make application on a specific form (detailed in many Revenue booklets) declaring your status. This form goes to the Bootle office and from then onwards they will deal with your affairs. They are very good and know a hell of a lot more than other tax offices about your expat circumstances. You will then generally be under the '90 day rule'. i.e. you can only go back to the UK for a maximum average of 90 days a year over a 4 year period. (This can be aggregated). Observing this rule allows you to be free of taxation in the UK for earnings acquired elsewhere, but not earnings from within the UK. HTH



Guin



MarkVPiazza


Joined: 14/08/2008
Posts: 530

Message Posted:
15/04/2009 15:28

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Message 10 of 25 in Discussion

Jimmy

The interest you earn on money in the TRNC is liable for UK tax, so you should declare it



Mark



guinness


Joined: 10/03/2008
Posts: 224

Message Posted:
15/04/2009 17:45

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Message 11 of 25 in Discussion

RE: msg 10



To clarify.

Only liable for UK tax if you are spending more than 90 days per year in the UK. If you have completed all the declarations and you are outside the UK for more than 1 full UK tax year (holidays allowed within the limit) then earnings outside the UK are not liable to UK tax.



Guin

(expat worker since 1985)



guinness


Joined: 10/03/2008
Posts: 224

Message Posted:
15/04/2009 18:52

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Message 12 of 25 in Discussion

And a PS if may.



The key phrase to describe the situation is a tongue twister used by the Revenue and goes .............. "not resident and not ordinarily resident in the United Kingdom".



That appears on the declaration that goes to the people at Bootle.



Guin



Jimmyboy63


Joined: 16/03/2009
Posts: 400

Message Posted:
15/04/2009 19:15

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Message 13 of 25 in Discussion

Jimmy

everything Guinness says is 100% correct. I have been a UK non resident now for 5 yrs,but before i done this i had to apply to the inland revenue for this status and send them a copy of my contract from the company who was employing me.Every year i send my accountant my anual earning's and get a letter back from the Inland Revenue telling me i have 0,00 to pay ( nice letter to open) and all i have to do is stick to the 90 day rule which Guinness explained earlier.



rtddci


Joined: 29/12/2007
Posts: 842

Message Posted:
15/04/2009 19:22

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Message 14 of 25 in Discussion

Have a look at the UK taxmans website. You can submit tax returns online.



http://www.hmrc.gov.uk/index.htm



Arthur


Joined: 04/11/2008
Posts: 687

Message Posted:
15/04/2009 22:51

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Message 15 of 25 in Discussion

Jimmy, a few people are missing the point here [apart from RobnJO]. If there was a partnership, late filing penalties are rendered on partnership returns of 100 per partner irrespective of whether there is any liability or not. This contrasts with an individual's self assessment return where the filing penalty is 100 or the tax liability, whichever is the lower [i.e. if you've got no UK tax liability, there's no penalty].

You haven't said what you're doing outside the UK, but generally if you're working abroad you will be deemed non resident, which means you will only be liable for tax on UK source income [you still get your tax allowances].

The question has to be why HMRC have not been informed of your retirement/resignation from a UK partnership and who was responsible, although [speaking as a chartered accountant!!!] technically it is YOUR responsibility to inform HMRC, although any competent and professional accountant would have done so [if he was told]



Brinsley


Joined: 04/04/2009
Posts: 6858

Message Posted:
15/04/2009 23:26

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Message 16 of 25 in Discussion

This is an odd one and has been explained to me on many occasions but still non the wiser. You can be domicile but non-resident or resident but non- domicile depending on what your CA advises on your declared income and assets. Bloody enigma to me but my advice is not to pay, let the IRS find you and deny any knowledge of previous communications.





Richard



Arthur


Joined: 04/11/2008
Posts: 687

Message Posted:
15/04/2009 23:30

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Message 17 of 25 in Discussion

Domicile is completely different, and generally won't make a difference to the question raised. Becoming not resident and not ordinarily resident is achieved far quicker if one leaves the UK to take up employment abroad- I could get my tax manager to give a technical answer, but you'd all be none the wiser!!!



trishyj


Joined: 07/08/2008
Posts: 77

Message Posted:
16/04/2009 01:01

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Message 18 of 25 in Discussion

Once the Inland Revenue have been informed that the partnership has ceased, as long as the partnership ceased in the previous tax year, and Inland Revenue were informed, you might be able to get the penalties reduced to nil. Your accountant dealing with your business should have already done this if they were being efficient.

There are quite a few things to consider when going to live abroad and treatment can be different for certain people. If you need further advice email me off board.



guinness


Joined: 10/03/2008
Posts: 224

Message Posted:
16/04/2009 02:20

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Message 19 of 25 in Discussion

RE: Msg 16



Brinsley, you are going even further off-topic than I did ! (Sorry Jimmy)



But Brinsley please don't ever get into talking about domicile until you have had an hour with a specialist discussing it and getting to know all the implications. Domicile is all about your roots and your family's roots. It starts with the origins of your father's family and where your father has lived and where he lives now or lived at his demise. Its a can of worms there is no need to get into unless one is a billionaire, and I don't think any of us are there just yet !



But the original problem as has been stated is all about communication, or lack of it. We all trust accountants to do these things but find out their failings all too late. Unfortunately there are very few accountants who understand being an expat, or living and working as an expat. It is a very specific topic for which one has to pay a good fee to get the best help. But the Revenue publish some excellent books on it.

Guin



fire starter


Joined: 19/06/2008
Posts: 3401

Message Posted:
16/04/2009 09:07

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Message 20 of 25 in Discussion

my feelings are that the accountant may have closed your partnership returns/company which you employed him to do.

you were responcible for your own personal tax affairs.

just explain to the revenue there has been a mix up.

once before when we moved house we got our personal returns at the new address but they didn't have the new address down for the partnership returns.

one hand never knows what the other is doing!



everyone should remember that even if you employ an accountant, you are legally responcible for all your own tax affairs.

so it pays to keep an eye on the accountant!



jimmy


Joined: 15/09/2008
Posts: 251

Message Posted:
16/04/2009 10:06

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Message 21 of 25 in Discussion

thanks for replies.......



My accountant has informed the HMRC that the business / Partnership was closed / dissolved so the fines are personal which is our responsibility so we will pay them. Before that though,I will send them an Email hoping I can get the charges dropped & I will fill in an on-line self assessment form.



Arthur


Joined: 04/11/2008
Posts: 687

Message Posted:
16/04/2009 10:52

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Message 22 of 25 in Discussion

Jimmy, if you read my earlier post, if the penalty is for the personal return [rather than a penalty for non submission of the partnership return], if you had no liabilty to UK tax, no penalty is chargeable. Bring the UK returns up to date and it should all be dropped if you have no liability



MarkVPiazza


Joined: 14/08/2008
Posts: 530

Message Posted:
17/04/2009 15:09

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Message 23 of 25 in Discussion

I think many residents would not wish to become officially "non-resident in the UK, as they would in theory, loose their entitlement to free NHS care



Mark



cyprusairsoft



Joined: 22/06/2009
Posts: 2066

Message Posted:
30/08/2009 12:48

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Message 24 of 25 in Discussion

"

in theory, loose their entitlement to free NHS care" just a theroy



i declared my self to hmc advised them of all situations and although have stated no longer a resident of uk i still pay tax on my pension and have tax forms to complete although i no longer work but best bit is got 800 quid rebate for paying to much tax luvely jubbly

easy way for jimmy is to give them a ring on skype and all the hmc numbers are on a website

clear the matter up and no fines



Harold2555



Joined: 19/04/2008
Posts: 1139

Message Posted:
30/08/2009 13:10

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Message 25 of 25 in Discussion

Arthur has clearly stated the situation. The fines for late submission of personal tax returns are the lower of 100 or the tax liability. No tax due no fine simple as that. We have the EU to thank for this as there is an EU directive on administrative fnes called roughly proportionality. If the fine is disproportionate to the liability it is illegal essentially.





With regard to Tax on TRNC income then if you are not resident nor ordinarily resident in the UK for a whole tax year then UK Tax is not due on non UK Income. The definitions of these terms are somewhat wooly and often confused. Residence is factual, and if you are outside the UK for more than 183 days in a tax year you are normally deemed non resident. Ordinarily resident is the 90 day rule (and some other technical bits) and is as mentioned above based on an average over 4 years. Travel days used not to count but do now (Because the Revenue decided!).



Harold



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