Pilot Uk Tax issues

[protogenio]

Flybe pilots could be liable for UK tax News Travel This Is Jersey (http://www.thisisjersey.com/2010/07/13/flybe-pilots-could-be-liable-for-uk-tax/)

Interesting article in Jersey news referring to Jersey based Flybe pilots having to Uk tax due to the company being Flybe Uk?
Surely this is a pandora's box,will all world-wide aircrew be expected to pay into HRMC coffers because they fly into Uk airspace,good reason to aviod it if you ask me ?:uhoh:
Sounds seriously overboard if you ask me ???

[Artie Fufkin]

As I understand it, the case hangs on a non UK resident working for a UK company and performing the majority of their duties in the UK being charged UK income tax.

Sounds reasonable to me.

It doesn't expose worldwide crews to the UK tax system. Eg, Thai Air pilots flying into London occasionally are not working for a UK company or performing the majority of their duties within the UK.

[cavortingcheetah]

If you're making money working for a British company and generating funds which will be imported in to England by the employer then the company may have to pay NICs on your behalf and you personally may have to pay UK income tax on such element of your income as was raised in the performance of the above duties. I think you will find that the Jersey/UK tax treaty, as amended in 1994, will ensure that no rate other than the highest rate of tax will be paid. So you won't end up paying double tax. But you could end up paying a lot of UK tax. HMRC has had its attention very much drawn to the life styles of BA flight crews. You could reasonably expect HMRC compliance to attempt to tighten as many loop holes as they can in order to generate further income tax for the embattled country. You could also expect a significant change in attitude to what is called rebate travel, the concessions that BASSA goes on about rather a lot. This benefit represents a cash equivalent in the hands of the ordinary ticket buyer and it could/should be construed as a benefit in kind. Therefore depending upon any negotiations with HMRC, the value of rebate travel could be added to the total income figure of the recipient who could then find himself liable for tax at marginal rate in the lot. The highest marginal rate would almost certainly be as much as 40% perhaps 50% in the case of high flyers. HMRC have not done much about this aspect of compliance insofar as air crews are concerned but there have been too many heads above the parapet recently with the BA cabin crew strikes for the UK revenue to ignore an easy target for an increase in taxation. It is a small point but politics does enter into taxation matters. HMRC would be more likely in practice to be more enthusiastic on compliance enforcement in a case like this if they knew that the public would favour the action and see it as 'fair'. I think it is a reasonable assumption that the general British public would not at all mind seeing a certain flag carrier's cabin crew hammered for some extra tax after the Pimms antics that have lightened the picket lines. It will not do to argue that, you are a non resident because you spend less than 90 days in the UK and because you depart and leave without spending a local night in the UK, HMRC 6, which supersedes HMRC 20 has already seen through that and stipulated that any activity undertaken in the course of work or even family pleasure will constitute that day as being a resident day even though no night was spent in the country. That knocks what might be called transit protection from resident status on the head. Wait for the next budget in the autumn and watch what the government proposes to do with a statutory residence test. Its muddy and deep waters but certain people and groups in aviation have splashed around so much that the watchers on the shore cannot fail to have noticed what has been going on in the fish pond. Each case is always taken on its own merit by HMRC because there is not a lot in English tax law that is set out by statute. It's all jolly little rules which are completely open to jolly little interpretations but its funny how often HMRC win their cases, undertaken with the deep pockets taxpayers' money, simply because their interpretation of the rules so often seems to be the one that the courts or commissions favour.

[cavortingcheetah]

Well, whatever is going to happen, if indeed it does, is bit like the budget. You'll just wake up one morning and find out that you're stuck with it.
In the case of the USA, as a general rule, if you are a citizen, regardless of whether you are a resident, you are liable for income tax on your world wide income and it takes at least ten years of physical absence to loose residence, even once your green card has expired. This catch net formula has not escaped the attention of either the HMRC or groups such as The Taxpayers Alliance, whose efforts and influence which are considerable might better be directed at the public waste rather than the public gathering. What is worrying perhaps is that HMRC have apparently obtained a ruling against a British airline at all. There seems to be little information available. HMRC have been flexing their muscles of late on residency and I note that tax avoidance, as opposed to evasion, is now considered a social crime. Tax mitigation is the buzz word for paying as little tax as you legally can. When governments start playing with the semantics you may look for some lies and hypocrisy. These are traits inherent in a socialist state such as Britain which now has an economic agenda possibly ultimately dependant upon the public sector unions, under which umbrella HMRC staff would seek refuge . The unions might need an economic scape goat or two before they bite the bullet themselves. What better victim to offer up to the green eyes than a handful of self perceived non residents who actually work for British companies, who are rich in their low tax regime and who don't vote anyway. You've seen it happen in Britain already, in the manifestos of all three parties, with so called rich foreigners and their companies. Many of both of these of course have left and will not be back under any circumstance. No one much minds paying tax not even high tax, even if it is drivelled away, but instability in tax policy is abhorrent. This is all mere idle speculation on my part but I think there is a space to watch there and a few decent enough reasons to watch it.

[AlpineSkier]

@cavortingcheetah

here is

a gift

of some paragraphs

Please feel free to

use them

when you post again;)

[windypops]

Register Flybe in Jersey rather than the UK as it used to be, problem solved.

[cavortingcheetah]

Alpine Skier.

Thank you for your suggestions. I had thought about the paragraph concept while crafting my post. Since my ideas all seemed to flow more or less along the same path dealing with taxation and HMRC and as there were no specific areas of development or conclusions that were reached within the body of the prose I decided to let it stand as a bloc or block, whichever spelling you prefer.

Having interjected a paragraph here, if interjections and paragraphs go together, at the risk of being rude, which is almost never my intention, I suppose that I could increase the size of the print of my prose in order to mitigate the eye strain often experienced by older readers in impecunious circumstances.

I have read through many legal books in my short lifetime and have often encountered the difficulty of being able to follow a superior train of thought when the expressions of that intellect have been consigned to one contiguous paragraph of continuous prose. I would have hoped that the English would have learned a lesson from some of the great writers of American prose; men such as Hawthorne, James, Emerson and others and liberally interspersed their writings with suitable lay bys where one could stop for refreshment. I am sir, rather fond of the American greats, believing that their personal examples of humanity far exceeded those of their British counter parts.

Sadly, and in conclusion, most page width these days does not permit of the borders required for restful reading repose and on that unhappy note, as I sink back in to my rocking chair and draw a fevered breath upon my last cheroot, I shall bid the exhausted and no doubt totally irritated reading public, adieu!

Toodle Pip!

[Gulfstreamaviator]

Well thats that problem solved.

Many companies have crews based in UK, and many companies are based in UK, with crews overseas.

I chose to live, reside, and work out of UK.

I pay the tax expected of me in my "home", being in the ME this is a round figure, but they tax us in many other ways.

glf

ps I love the comma, dont you.

[protogenio]

I find the double standards of HRMC hard to swallow on the one hand they are now saying its not about residency now ie Isle of Man pilot flying return trip to and from his place of residency back to his home base is now liable to Uk tax because he has dipped in and out of Uk airpsace for only a few hours and mostly not even stepped of his aircraft unless its for a walkaround.
On the other hand they are now telling private jet owners they will be taxed not on where the aircraft is registerd ie Cayman but based on where the owner is resident ??:ugh:
You can't have it both ways people.....
The tax policies are all over the place in thier desperation to plug the deficits,its preposterous !!!!!
Not only that,where does it end-does it therefore mean all aircrew working abroad ie Easyjet or Ryanair pilots based in Rome or Paris will be liable to taxation in both countries because they are working for a UK company,sounds like a perfect way to strangulate the aviation business if you ask me ?:yuk:

[Nightstop]

easyJet pilots working in Spain do so for easyJet Spain SL, which is a Spanish registered company. Spanish taxes and social security are correctly paid to the Spanish Government, so there's no interest from UK HMRC in those living & working there.

[cavortingcheetah]

HMRC can have it both ways and usually attempts to do so. It is not in the brief of the tax man to assuage the tormented breast of the tax payer. Fear and terror are far better weapons in the fight where every one is perceived as a tax evader with criminal tendencies.
The instability in the British tax system is, in my opinion, a grass root which, until it is properly sorted out by the introduction of statute will always discourage investment either corporate or individual. I do not think that any other important economy has a tax structure as complex and so indistinct as Britain's.
It seems to me though that what could have happened here is that HMRC might be attempting to open a new tax folder. Here is what they might be up to.
The pieces of prose within the !(())! are quotations!
It is from this page of the US IRS website.

Foreign Earned Income Exclusion - What is Foreign Earned Income (http://www.irs.gov/businesses/small/international/article/0,,id=96811,00.html)


!((Source of Earned Income

The source of your earned income is the place where you perform the services for which you received the income. Foreign earned income is income you receive for performing personal services in a foreign country. Where or how you are paid has no effect on the source of the income. For example, income you receive for work done in France is income from a foreign source even if the income is paid directly to your bank account in the United States and your employer is located in New York City.

If you receive a specific amount for work done in the United States, you must report that amount as U.S. source income. If you cannot determine how much is for work done in the United States, or for work done partly in the United States and partly in a foreign country, determine the amount of U.S. source income using the method that most correctly shows the proper source of your income. In most cases you can make this determination on a time basis. U.S. source income is the amount that results from multiplying your total pay (including allowances, reimbursements other than for foreign moves, and noncash fringe benefits) by a fraction. The numerator (top number) is the number of days you worked within the United States. The denominator (bottom number) is the total number of days of work for which you were paid.



Example:

You are a U.S. citizen, a bona fide resident of Country A, and working as a mining engineer. Your salary is $76,800 per year. You also receive a $6,000 cost of living allowance, and a $6,000 education allowance. Your employment contract did not indicate that you were entitled to these allowances only while outside the United States.

Your total income is $88,800. You work a 5-day week, Monday through Friday. After subtracting your vacation, you have a total of 240 workdays in the year. You worked in the United States during the year for 6 weeks (30 workdays). The following shows how to figure the part for work done in the United States during the year. Number of days worked in the United States during the year (30) ÷ Number of days of work during the year for which payment was made (240) × Total income ($88,800) = $11,100.

Your U.S. source earned income is $11,100.))!


The point of all of that of course is that it enables a broad global sweep of income taxation while at the same time allowing a calculation to be made as to any applicable with holding tax proportions.
There have been calls from elements within political parties for Britain to move to a taxation system based on citizenship as well as residence. This would probably sit well with the public who would regard having to pay UK tax as a fair trade for a visit from a British embassy official when you were banged up in a Turkish jail for smuggling Greek birds to Albania for prostitution, or any other amusing activity which falls foul of the political police.

Nightstop:
That'll be quite true so long as the guys do nothing to break the 90 day /183 averaged over 4 year 'rule' and thus become resident in the UK. If I lived in Spain there'd be no chance of that happening and anyway you'd still get credit under the double treaty. Mind you, Spain operates a very friendly ex pat working locally based tax schedule on foreign sourced income. It's also true in the case of British residents who leave the country for at least one full tax year under a full time contract of employment.
It's all conjecture but it is hypothesis brought on by the action of the controlling authority and therein lies the problem and the confusion.