Foreign Tax dilemma

KaelaH
KaelaH FMAAT, AAT Licensed Accountant Posts: 131 ? ? ?
I have a client who sells online in the US, currently his earnings are all paid less a 30% withholding tax.
We are currently working on completing various forms to ensure that his income isn't taxed at source in the future and that the tax withheld in 2012 will be refunded. However, for the 2011-2012 tax year there is an amount of tax that has been withheld and he won't get back.
My dilemma is a) how to account for it properly and b) the best way to declare this on the SA800/Partnership Statement. I have had conflicting advice from HMRC and feel like I'm going round in circles.

Firstly, in the accounts, I currently have the Gross income in P&L as Sales and the withholding Tax sat on balance sheet. Now i know that a proportion of this is not going to be refunded from IRS I am guessing this shouldn't be in the balance sheet - what is the best action to take?

Secondly, as far as I can see this does not relate to the type of Foreign income on the Foreign pages of the SA800
PARTNERSHIP FOREIGN specifically states :
  • interest, dividents or other income from savings or investments abroad
  • income from land or property abroad
  • any other income from sources outside the UK (except foreign income earned in the course of the partnership trade or profession - include this in Partnership Trade and Professional Income pages instead)

so.....I have completed the Partnership Return as per the accounts but am struggling where to declare this tax that has been paid.
As it is not UK tax I am assuming it doesn't go in box 3.98 (Tax taken off trading income) or am I wrong?

My final query also is whether or not I should be filing a short partnership statement or a full one - again, getting very conflicting advice from HMRC

Comments

  • Bluewednesday
    Bluewednesday Registered Posts: 1,624
    I thought that the full partnership return had the place for with holding tax but it's been a long time since I've done one so I stand to be corrected!
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