UK registered company director working abroad

jiltjilt Font Of All KnowledgePosts: 2,903Registered
In June I agreed to take on a client (Mr C) who was a director of an SME who's accountant (Miss T) had simply said she couldn't look after his accounts any more and barely gave him any notice. Everything appeared straight forward at first and then I began to get more information and his previous accountant's details. I wrote requesting clearance and the usual information and discovered the following:

Mr C is director of a UK registered company providing engineering services worldwide. During the 2011/12 tax year he received a salary of £51960 through the company, no tax or NI were deducted. Mr C only spent 45 days in the UK during 2011/12. All work is carried out overseas but he maintains a home here in the UK and has a wife and family here.

He also received a directors loan and a cash equivalent figure of £830 was filed on a P11D. HMRC have sent a reminder for the £114.54 class 1a, not sure if Miss T informed Mr C it was due or not.



Miss T wrote to HMRC late April 2012 asking them to confirm she could use NI letter X so he would not pay UK NI. HMRC wrote back in June requesting a CF83 be completed however she had already filed the P35 and no NI was deducted. I have downloaded the form for my client however I have since checked leaflet NI38 and for NI purposes Mr C is classed as ordinarily resident in the UK and therefore must pay Class 1 NI.

Mr C's SA tax return - employment pages, no entry in box 1 but there is an entry for the interest free loan he received.


I'm happy that for NI purposes he is ordinarily resident in the UK but even after reading through HMRCs guidance on residence status I am still not 100% sure about Mr C's status for tax purposes. It says:

To determine whether you are resident in the UK we will always look at the pattern of your life and the number of and reasons for your visits to the UK.
If you were living in the UK but you left before 6 April 2011 and since your departure:
• you have lived, or intend to live outside the UK for three years or more, or
• you have lived and worked fulltime outside the UK throughout the year ended 5 April 2012, or
• you have accompanied your spouse or civil partner, who lived and worked
fulltime outside the UK, throughout the year ended 5 April 2012, and your visits to the UK have averaged fewer than 91 days in a tax year over the period of absence or from 5 April 2008 to 5 April 2012 (whichever is the shorter), then in most cases, you may be nonresident.


Does the underlined bit refer to all 3 points or just the 3rd one? Also even if he is not liable to pay UK tax on the salary received though his limited company should it still not have been entered in box 1 of the employment pages?

No engagement letter signed yet and no invoices raised, do you think I should walk away from this client and refer him to someone with lots of experience of clients working overseas?

Comments

  • MonsoonMonsoon Font Of All Knowledge Posts: 4,071FMAAT, AAT Licensed Accountant
    jilt wrote: »
    No engagement letter signed yet and no invoices raised, do you think I should walk away from this client and refer him to someone with lots of experience of clients working overseas?

    If you're really busy and don't want a headache, I would go with this option.
  • jiltjilt Font Of All Knowledge Posts: 2,903Registered
    You're probably right Jenni but I'd still like to discover where he stands in all this, I'd like to at least send him away with some correct advice. I imagine it's too late now though as he actually came back to the UK yesterday and is calling in to see me at 2pm! :ohmy:
  • jiltjilt Font Of All Knowledge Posts: 2,903Registered
    Well Mr C has been, he is going to get some expert advice regarding residency for tax and NI purposes etc but still wants me to produce his VAT returns, accounts and tax returns.

    After checking on HMRC's site his 2011/12 tax return hasn't been filed even though he and I were both lead to believe it had. I'm beginning to wonder if the previous accountant decided to quit because she wasn't entirely sure sure what she was doing. If that is the case she should just have been honest with him and said she was out of her depth and that he should seek specialist advice. I did and he's going to do just that but still keep me to prepare everything once we have the correct information. He's a terrific guy, really laid back, I wish they were all like him.

    When I have the correct advise I will post it on here as it may help others in the future.
  • MonsoonMonsoon Font Of All Knowledge Posts: 4,071FMAAT, AAT Licensed Accountant
    jilt wrote: »
    Well Mr C has been, he is going to get some expert advice regarding residency for tax and NI purposes etc but still wants me to produce his VAT returns, accounts and tax returns.

    After checking on HMRC's site his 2011/12 tax return hasn't been filed even though he and I were both lead to believe it had. I'm beginning to wonder if the previous accountant decided to quit because she wasn't entirely sure sure what she was doing. If that is the case she should just have been honest with him and said she was out of her depth and that he should seek specialist advice. I did and he's going to do just that but still keep me to prepare everything once we have the correct information. He's a terrific guy, really laid back, I wish they were all like him.

    When I have the correct advise I will post it on here as it may help others in the future.

    Super result!

    And thank you, would be interested for the update.

    Often, I will take someone like this on, but at the moment I would just say no thank you to the complex stuff as I have too much on my plate.

    Well done :D
Sign In or Register to comment.