How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask UKSolicitorJA Your Own Question
UKSolicitorJA, Solicitor
Category: UK Immigration Law
Satisfied Customers: 4312
Experience:  English Solicitor and UK Immigration Law Expert
Type Your UK Immigration Law Question Here...
UKSolicitorJA is online now
A new question is answered every 9 seconds

International tax question. Since 1998, I have worked for

This answer was rated:

International tax question. Since 1998, I have worked for a Hong Kong company as a long-haul airline pilot, based in London. In 2008, my company transferred me to a UK Branch of the parent company and told me to clear from the Hong Kong tax system. The Hong Kong IRD released me. 4 years on, they say it was a mistake and are asking for 4 years' back tax. Is this legal? I read somewhere that tax had to be predictable, which this clearly is not. Is this the case?

Why is the IRD backtracking?

Thank you
Customer: replied 5 years ago.
They say that the UK Branch was not a proper UK Company simply part of a Honk Kong one. They say, therefore, that all along I have worked for a Hong Kong company so I must pay Hong Kong tax. Because I am BASED in the UK, I come under UK law. (House of Lords ruling 2007). The IRD are saying that, in effect, I have worked for a Hong Kong company all along and they want their back tax. I have approached my Company at the highest level many times but they not interested. I am British but live in Cyprus. I pay UK Paye and this a small amount of tax based on an HMRC formula. I pay a small amount of tax in Hong Kong based on a pro-rata formula given to me by the HKIRD when I was cleared by them in 2008. The Cyprus Authorities demand nothing from me as I spend less than 183 days a year here. I have no real qualms about paying full tax in Hong Kong in the future but the 4 years of back tax is not budgeted for or acceptable to me.
The UK and HK have a double tax treaty but it would probably not apply to the years that the IRD is demanding back tax from you:

Normally, under tax laws, you would only pay income tax if you were deemed to be resident and ordinary resident in a particular country, if you were not resident in HK during those years, you should not be liable to pay HK tax on your UK income as you are also not HK domiciled.

You may need to appoint a local HK tax lawyer or expert to fight the IRD if you do not get them to back off.

All the best. Please leave feedback
Customer: replied 5 years ago.
I am, indeed, paid in the UK into a UK bank account and there is little doubt that I come under UK Laws. This was the very reason the parent Hong Kong company moved me there. Also, I pay PAYE to HMRC. The snag seems to be that the IRD insist that I pay FULL HKG tax because the parent company is in Hong Kong. Surely where if I come under the Laws of UK and am based there, it should not matter whom I work for. Is this the case?
Yes, that is the case.

Please leave feedback
UKSolicitorJA and other UK Immigration Law Specialists are ready to help you
Customer: replied 5 years ago.
This is great news. Thanks. I now will object to the IRD.
Thank you. Please leave feedback
Customer: replied 5 years ago.
Reference my situation and your last comment about being employed in the UK and therefore not having to pay tax to the IRD, Article 15 of the OECD Model tax Convention states that, as a pilot, I "may be taxed in the Contracting State in which the place of effective management is situated". This is Hong Kong in my case even though I am employed in the UK. Does this affect your answer ?
I cannot comment on the OECD model conventions but reiterate my understanding of the law
Customer: replied 5 years ago.
JA. Would it be possible for you to give me a letter stating my position and giving your opinion that I should not be subjected to HKG tax ? I can give you the history of events. A letter of objection from you as a solicitor might carry more weight.
I am afraid we cannot do that, rules of this website and the Law Society.

If you are based/resident in the UK and pay tax in the UK, you would be subject to UK tax rules. I cannot comment on HK law or rules.

Related UK Immigration Law Questions