Non resident part way through tax year

Non resident part way through tax year

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Happy New Year All! Well Nearly.

I haven't dealt with 'non-residents' before and my theoretical knowledge is rusty so looking for some pointers on this one particular client.

He was UK resident and self employed for 3 months in 05-06 and in July 2005 went off to Dubai to work there. He's still over there now.

He let his UK property out when he left in July 2005.

My questions are whether his Dubai income is taxable for 05-06 if:

1) He has 'burnt his bridges' and decideds never to return to the UK
2) decides to come back to the UK after 5 April 2007.

Am I correct in thinking that 06-07 income would be completely tax free as he will have been out of the country for the full tax year (assuming he stays out of the UK till at least 6/4/07)?

Would answers to any of the above be different if he was working for a Dubai branch of a UK company and was partly remunerated into a UK bank by the UK head office with the main remuneration being paid by the Dubai branch into his Dubai account?

I have come accross form P85 and was wondering what part these play. It appears HMRC will dictate the tax treatment based on answers to the questions on the form?

Would he qualify for the NRL scheme in 05-06 and then beyond? It seems a tax return would be due regardless?

Any pointers would be gratefully received.
Mark Wilding

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Euan's picture
By Euan MacLennan
17th Jan 2007 17:19

Duplicated question
I thought I had answered this question and when I looked back I found that the question had been posted twice. The comments were made on the other posting at:

https://www.accountingweb.co.uk/cgi-bin/item.cgi?id=163341&d=1031&h=1021&f=1026&dateformat=%25o%20%25B%20%25Y

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By User deleted
17th Jan 2007 13:54

Employed?
I must get new glasses as this is a query unnoticed until now-sorry.
Possibly a long time ago, HMRC did not worry about the distinction, but , currently, they do, so I am making the asumption that the client is full-time employed, rather than self-employed, in Dubai. Responses to questions:
1. Not liable.
2. do.
3. If you mean Dubai income,yes, so long as no more than small, incidental duties are performed in the UK. (This caveat goes for (1) as well).
4. No. Remittance should not affect the position here.
5. Client, under HMRC practice, will be classified non-resident from date of deparure. The Residence supplementary page of the 2006 Return should be completed and split-year treatment claimed. If an aspect enquiry is made, the probability is that the client will be asked to submit a P85.
6. Either the tenant or the collecting agent (if there is one) must deduct basic rate tax from the rent if the landlord has a foreign address. They accordingly have no need to ascertain whether there has been an official declaration of non-residency. The advice has to be : get hold of an NRL form and lodge it asap.
7. Yes, a return will be necessary: who knows, the client may get some tax back or not suffer any on the rental income because of the Personal Allowance he continues to enjoy.

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