Approach of UK Taxman –drawing closer and or turbulence ahead.
Clearly it is becoming more evident within the wider community that the UK Revenue (HMRC) are actively seeking to tighten their approach and grip extending taxing arms as far as possible in many respects but also in relation to aircrew.
The whole matter has been rumbling on for a long time but looks as though it may now overflow and probably result in further shake ups.
Some may encounter problems which could include greater risk of a retrospective challenge regarding any claimed Non Residence status and UK tax position, particularly in respect of any periods during which a UK basing has been or will be held. Subject of course to overall individual facts of each case.
HMRC guidance within IR20 is long over due a complete re write and simply cannot be relied upon.
UK Tax Residence status is covered by very little UK legislation with additional guidance, practice, and concessions being drawn from case law.
Tax cases of Robson v Dixon 1972, Shepherd 2005 and more recently Gaines-Cooper 2006 refer.
When trying to stay a step ahead, various considerations (list below not exhaustive or necessarily in any particular order of importance) will impact upon the outcome and they include:-
1) your physical presence (i.e. visits to UK)
2) performance of UK substantial duties ( i.e. working flights) or not
3) UK accommodation maintained available for use or not
4) Basing UK or overseas throughout relevant period
5) Location of home and family
6) Host country tax position (returns filed/tax resident/tax paid)
7) Application of relevant Double Taxation Agreement (Tax credit/exemption)
8) Standing and use of overseas property (family home / holiday home) etc.
Some have already encountered individual enquiries from the UK taxman into self assessment tax returns previously submitted and this trend is only likely to escalate.
Of course this can prove to be both time consuming and costly to both sides.
Perhaps any blanket company negotiations with HMRC will seek in the first instance to result in the same general outcome for the majority of individuals on say a UK basing with PAYE income tax at source, but I envisage that each case will surely remain open to individual review and assessment (i.e. switch to UK tax up front and possible Non Resident claims and sc690 codes or No Tax codes and annual SA tax return/Refund).
Much rumour will no doubt continue to abound and perhaps it’s a question of watch this space and others, awaiting further developments whilst contemplating just how many hoops you may still wish to try and jump through. Providing they tell you in advance of course and that has been another great historical problem within this developing area of UK taxation.
Will you still be able to continue to live abroad effectively within your chosen host country and have this upheld by the UK tax authorities when on a UK basing?
Probably yes, providing that all other relevant criteria are adhered to and indeed upheld, then it should still be possible to take a view that a UK Non Residence status could continue for some with restricted UK liability arising to the extent of remuneration attaching to UK duties performed and other UK arising income.
The more important questions may be do you still want to live abroad and will any combined foreign taxation turn out to be more onerous than any UK liability?
UK tax authorities will continue to have regard to your individual circumstances and lifestyle choice but you may find yourself, as others have indicated, filing tax returns to three or more jurisdictions -with all of the attendant admin and fees.
So do seek further professional advice within each relevant jurisdiction, being that of your home country, basing and employer’s location.
Turbulence ahead possibly so, but hopefully with careful planning - not for everyone.
David