Tax Problem

[joe]

Worked for an Irish Airline for a short contract and was paid Euro's into an offshore account. Having never received any payslips from the company, (pestered them numerous times), I can only assume that i have paid the correct amount of tax due. The airline went bust shortly after i left and i have had no contact whatsoever with accounts or payroll. I never had any gap in paying income tax in the uk as this work was caried out on half paid leave from my permanent airline. My question is, I have just received a letter from the offshore bank stating that due to new laws all my account details would be made available to the HMRC. If they start asking questions how do i explain my situation as i only ever had the accounts departments word that they were organising my tax for me and i have no paperwork to prove what I have paid??.

Anyone experienced anything similar as there are alot of contractors out there.

Many thanks
Joe

[Luke SkyToddler]

Cant' actually advise you about your tax liabilities but if it makes you feel any better, it's just a form letter, every single person who banks in the IOM or Channel Islands has been sent the same letter.

[Barry Hallam]

If you have an offshore bank account and have not declared the interest (but should have) you need to Notify HM Revenue & Customs of your intention to disclose liability by 22 June, This should fix any penalty at 10% of outstanding tax (there will also be interest) If you miss 22 June the penalty could be 100%. HMRC can go back 20 years!
The letter from the bank has come about becauese HMRC now has access to account details for may hundreds of thousands of offshore accounts.
You may need to seek professional advice. Look at the Revenue website
https://disclosures.hmrc.gov.uk/oaics/
Barry Hallam

[BALLSOUT]

Come on Joe,
Euros paid into an offshore account! sounds to me as if you knew full well that there was no tax being paid. The problem is, looks like you are about to get caught.
The industry is full of contractors who are paid offshore, all thinking that its OK for the rest of us to pay our dues, but not them.
If you are found out, they will fine you at least 100% fine, on top of any tax etc that is due.
If i were you, i would get an accountant on the job and come clean first.
BALLSOUT.

[hapzim]

Ask your bank about paying a with holding tax in their juristriction. Then the revenue shouldn't get to see you details.

[cavortingcheetah]

:hmm:
Not words from the pen of an accountant but rather from one who has had more than a nodding acquaintance with them
If you were resident in the UK for tax purposes and received income paid overseas then this income should (presumably) have been declared on your UK income tax form. It is not for you to decide what tax you have to pay, rather the onus is on you to declare your world wide income and let the revenue determine your tax liability.
The standard letter has indeed been sent to everyone with an offshore bank account, following a very recent court case. The revenue will work their way through the list in an effort to reclaim billions of tax money which they perceive as being lost to them.
The amnesty deadline is a real threat line in the sand. Anyone who should have declared offshore income after this date and who has not done so will be penalised very heavily. This draconian attitude on the part of the revenue has come about, in part, because the revenue in the UK has been merged with customs and excise.
If you cannot prove that your employer paid tax on the income you received overseas, it is almost certain that the revenue will determine that no tax has been paid.
You would therefore be liable for UK income tax on this at your maximum rate, probably 40%?
Therefore your options are really quite clear.
Talk with an accountant.
Talk with the revenue themselves.
Write the revenue a letter, before the deadline, stating what you were paid and for why but explaining that you do not think that you are liable for tax on this money. This will at least provide disclosure and keep you clean of the charge of evasion.
Do nothing about it and probably worry about it quite a lot. Your chances of being eventually discovered are very high and probably not worth the powder to blow the matter to hell.
Budget 40% of what you received as what you will have to pay, as a minimum, if you come clean about it now.
Remember too, that if the revenue do get around to you, they may well examine all your tax affairs. Perhaps you once drew some money from this account and brought it into the UK? Even if you are non domiciled in England, you would be liable for income tax on that amount.
The revenue in England is becoming very much more like that in the USA. A little jingle from that part of the world tells one 'not to mess with the IRS'.
Hope that helps. :)

[Captain Mainwaring]

A word of advice from someone who has been 'investigated' by the Taxman.
Be open and honest and be seen to be trying to help them all you can, i found this approach helped me alot to resolve the problems. He may well raise an estimated assessment and ask you to prove it is excessive. At least you can avoid the penalties arising after 22 June, if not the tax (over)due. They will get round to you and when they do they will not let it go until they are satisfied that all income has been assessed and the tax paid.

No time to lose

[Dan Winterland]

I seem to remember a letter from my accountant saying that an amnesty is being offered if you contact the IR by a certain date. After that date, if they think you have been evading, they have the right to fine you to a maximum of the tax owed, plus interest.

Death, tax and nurses!

[FL245]

I got the same letter.

In my experience of tax, offshore banking etc... Say Nothing

Employ a professional who knows about these things, otherwise you just might shoot yourself in the foot. Whilst honesty is best policy, its better to consult a tax professional and have him act on your behalf with the revenue

[joe]

Many thanks for the responses. I have managed to find my initial contract which states that:

" the company will deduct Income tax (PAYE), PRSI and other agreed and statutory deductions at source. Your salary will be paid by Credit Transfer in monthly instalments...."

I worked for the company from the end of January to mid March so as you can imagine the sums are not huge but all the same.

I have tried to contact the liquidators to find out what taxes were paid however the liquidators have also gone bust. It gets more of a joke but a quick search of Irish airlines going belly should prove what I am saying. I honestly don't believe the airline ever paid taxes. Why did i not gain a PPS number? and after all any 16 year old could knock up a false paysheet.

The other problem is that the monies i did receive were not in monthly instalments at all, but were in 3 random chunks. The result is that some is due in tax year 05-06 and some effects 06-07 even though i only worked jan-March 06. Due to the "chunks" being random I have no way of determining the splits of what is income, FDA and ABA (FDA/ABA 65% tax free). Due to the other 2 payments being after 5 April 06 I can simply, i think, fill in an self assestment tax form for 06-07.

Its not an easy case and fear that seeking specialist tax advice would lead to me paying £200 / hour till the cows come home.

Should have been a doctor.

[Captain Mainwaring]

Joe

It should not matter to your tax affairs whether or not the deductions were actually paid over by the Company. This sort of thing happens all the time. It has happened to me twice, but i did have the payslips. Suggest you declare to them the info you have got and that should be the end of it. It will be easy enough for HMRC to check into it

[cavortingcheetah]

:hmm:

One has to second the sound advice provided by FL245. In the couple of occasions over many years when one has tried to be honest with the taxman, the result has been nothing but trouble leading to the need for an accountant anyway. This has incurred unnecessary expense as he invariably had to sort out the misconceptions and false assumptions to which the jolly old revenue had jumped. Remember too, that the taxman is a far more belligerent beast now than he used to be. The sums of money involved are not really the issue here. It's more one of clearing up the matter as expeditiously as possible. A quick letter from any decent accountant would probably sort things out. The tax man would, on the whole, far rather deal with a professional than the enthusiastic amateur. It rather depends on whose desk at HMRC your file ends up. You should perhaps always assume that the taxman is a thoroughgoing nasty little bastard until he proves that he is really a very decent sort, which of course, he is!:rolleyes:

[DIRRIK]

Are we talking about EUJet?
Was the salary paid via an agency outside Ireland?

Regards

D.

[potkettleblack]

As a former accountant (not tax though) I would advise you to never deal directly with the Revenue. Instead get a professional tax advisor to advise you and if necessary enter into correspondence on your behalf. The IR is much less likely to pursue a case if they have to deal with a professional advisor than if they get hold of someone who shoots themselves in the foot with every word they utter. They really don't want to enter into a lengthy exchange of correspondence and discussion of legalise when they can go after an easy target. Remember that a lot of them are on performance targets and some even get bonuses for money recouped.

[Airbrake]

I got investigated by the Inland revenue concerning tax relief on NVQ's whilst going through flying training. I had been totally honest and had nothing to hide but the sums involved were several thousands of pounds.
The guy who investigated me was a prat! Fortunately I had photo copies of everything and even had to get statements from the CAA confirming all my exam fees for flying and ground exams.
In the end I threatened him with a formal complaint of my own and sent him a list of telephone numbers of all the schools I had flown with and told him to call them direct.
In the end they owed me a few hundred pounds. Get professional help if you think there could be an "issue" concerning your tax!

[DIRRIK]

Anyone knows a good irish tax advisor/accountant who has experience with aviation?

[pilot999]

The only people who have been sent the forms are those who have an offshore bank account and live onshore, those living offshore do not get the forms .

[cavortingcheetah]

:hmm:

At the risk of being as pedantic as the revenue might be; that is not exactly true.
Offshore bank account holders using UK postal addresses have been sent the letter regardless of whether they live in the UK or are domiciled in the UK.
The revenue has no way of sifting such information from the banks who supplied the client lists in the first place. Each case, as the revenue gets to it, will be taken on its own merit.
Beware, the revenue is going to examine each and every off shore account holder. It will take time but it will grind very thoroughly.:eek:

[despegue]

That is why it is important to have an off-shore account in a country that will NOT give your details to any state.

Say that you have your home and family in the UK, are flying for a Greek airline based in Spain via an agency with their offices in Sweden. That agency gives you a contract that states that is composed under the Mauritius law.
To whom do you have to pay taxes...:ugh:

But I am sure that all contractors are doing their utmost to be as legal as possible. We are all honest and hardworking, law-abiding citizens.

[pilot999]

The hmrc do not have details of the actual transactions within the account, only the details of the account.

[OneWorld22]

You could always just pay your taxes in the first place like the majority of other workers have to do......:rolleyes:

[joe]

Oneworld22,

Thank you for a pointless, un-informative post. I have never evaded nor avoided the issue of paying tax. I was faced with a problem and asked for advice from the wider community. If you read about my predicament my contract stated that all deductions would be made at source, PAYE, PRSI etc etc.

My many thanks to all who have contributed.

Problem resolved ??? answer yes. No offshore disclosure, just a 2006-07 self assestment tax form.

Safe flying

[OneWorld22]

Oh lighten up joe FFS :rolleyes:

[Whirlygig]

This might sound like an obvious point but, if you calculate the gross amount you were due from January to March per your contract and the amount you received in your bank account, does the difference equate to deduction of taxes? Or do they owe you salary as well?

Cheers

Whirls

[DIRRIK]

still nobody who knows a good accountant in ireland who is familiar with aviation matters and fact of non residents working for irish companies?

[potkettleblack]

Why not give IALPA a call. Their contact details are on their website and I am sure that they can point you in the right direction.

[Big-Flame-Out]

I am not a Pilot - nor Accountant.

Certainly the rules a few years ago was like this:
If you are a UK resident on an Irish payroll working in Ireland then you pay tax and deductions to the Irish taxman just like an Irish Resident employee. You should declare the income on your UK tax return. The UK tax authorities then assess the income under UK tax rules.

If you are due to pay more tax under UK rules than you have already paid the Irish system then you have to pay the difference to UK taxman.

If you are assessed with a lower tax bill in the UK than you have paid to Irish taxman - NO refund.

Recommend you get professional advice particularly if you are missing paperwork - try yellow pages and look for any accountant in Newry or L'Derry

[DJS]

Approach of UK Taxman –Resident or Not?

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.

Conflict of International law regarding taxing rights can be a complex subject.

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 where do you want to live and if this is abroad 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