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Hi Sam. Im a bookkeeper, questions are regarding a client He…

Customer Question

Hi Sam. I'm a bookkeeper, questions...

Hi Sam.
I'm a bookkeeper, questions are regarding a client:
He is in a partnership and self employed, for the Tax year 2008/09 his self assessment return was for both.

He still have to submit his 2009/10 self assessment return, the partnership stop trading on 05/04/10. Since 21st July 2009 he has been working in Afghanistan.

Question, went completing the self assessment return for the partnership, once I have completed all the questions and tick the box that it stop trading, do I have to notify anyone else or fill in other forms?
FYI, the partnership made a loss for the tax year 2009/10.

Question: During the tax year 2009/10 from 6/04/09 -20/07/09 he has been working for the partnership, from 21/07/09 – 05/04/10 he has be working outside the UK as self employed. During the period working aboard he has been back in the UK in total 62 days. Can he be treated as a none UK resident so that the income from working aboard is not liable to UK tax?
He has already completed a P85 and submitted it, but haven’t had any confirmation from the Inland Revenue.

Thanks
Ron Matthews

Submitted: 12 years ago.Category: UK Tax

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3/30/2011

UK Tax Professional: Sam, Accountant replied 12 years ago

Sam, Accountant

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Hi Ron

Thanks for your question

Yes you must advise HMRC in writing that the partnership has now ceased, as HMRC do not always make use of the cessation date as per the self assessment return/partnership page. However you advise that the partnership ceased 05/04/2010 and then further on in your question that it ceased 20/07/2009 so make sure you are informing HMRC of the right date.

How long was this contact as a sole trader to last for with his work in Afghanistan. It started 21/07/2009 and was to last until when.

Although you advise what visits he had back to the UK, during this period (62 days) this seems a lot on a pro rata basis - are you sure he has actually moved abroad, or is just working abroad.

Is there any patten to his visits and as an aside, what visits has he made since 06/04/2010 to date (as the review of non residency is not undertaken until the first full tax year has been achieved.

Finally when was the P85 submitted ?

Thanks

Sam

Customer reply replied 12 years ago

Hi Sam,

Thanks for pointing out the date the partnership ceased trading. Which department do we send the letter telling them that the partnership has now ceased?

The Afghanistan contract was up to 8th March 2011, as of 22nd March 2011 he is in Iraqi with a new contact and different company. As long there is war he is going to be out there for a long time.

He didn't move aboard but just working aboard as an "Close Protection Officer" (Bodyguard ). The rota is 9 weeks on and 3 weeks off and it the same for all companies in this type of business.

Between 06/04/10 and 31/03/11 his the visit add up to 151 days. The visit days during the Tax year 2009/10 was 59 and not 62.

The P85 was sunmitted on the 2nd Dec 2010. For the question "When did you leave , or when are you leaving, the UK" he fill in 24/04/2008 instead of 21/07/2009. Do we have to submitted a new form with the correct date?

Regards

Ron

UK Tax Professional: Sam, Accountant replied 12 years ago

Hi Ron

Thanks for your response

You need to just write to the tax office that deals with the partnership to advise that the partnership ceased, and I assume you have registered the sole tradership already.

Your client has not actually moved abroad (and the is the criteria that is needed for a no tax position to apply) he is merely working abroad, and this is going to cause problems as he is not a genuine non resident case, and even if HMRC overlook this fact, we then have the problem that this initial contract did not last more than a full tax year (was from 21/07/2009 to 08/03/2011) and then he started a new contract on 22/03/2011 and I assume returned to the UK between those two dates.

SO HMRC are going to have issues here too, as this first contract did not last more than a full tax year (so beyond 05/04/2011) and his return to the UK would then cease that non residency consideration and a new claim have to be considered from 22/03/2011.

Why was HMRC advised that he left the UK on 22/04/2008? This must absolutely be rectified without delay-

Thanks

Sam

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Customer reply replied 12 years ago

Hi Sam,

Just to be clear, we have to re-issue the P85 with the correct date he left the UK which was 21/07/09, the contact has to be with the same company for the whole tax year or more before HRMC will considered it as a non residency?

In this case changing contacts during the tax year, is there any way he can still be considered as a non residency? yes he did return to the UK between contacts for 8 days.

Can't we use the partnership tax reference to complete his self-employment tax return or he has to register as a sole trader?

FYI, I took over the book end Janaury 2011.

Ron

UK Tax Professional: Sam, Accountant replied 12 years ago

Thanks for your response

I would not just reissue the P85, but send in a covering letter explaining how the incorrect date came about, and advising that this latest P85 overrides the original one already submitted.

As your client returned to the UK in between contracts - then HMRC will be treat this return as him being resident for that period (as not only did he return to the UK, but also had finished the previous contract) so HMRC may exclude this previous period of time as being counted towards the non residency position, so do also enclose a new P85 to cover the date from when the new contract began - so they can establish the pattern emerging for that year.

And in future a contract has to last at least a full tax year - for HMRC to even consider it as non residency and a exemption form UK tax.

Regarding the self employment - you should alert HMRC that there is now a sole trader income starting (and you will advise that the partnership has ceased) they may well allocate a new UTR (10 digit reference number) much will be dependent on whether they close the partnership down first or add the sole trader in first.

So phone HMRC to advise the sole trader has commenced and that the partnership has ceased.

Thanks

Sam

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