Tax on overseas work (Should I really pay ?)

Dear All,

I recently started a 1 year(ish) contract in the Middle East on 1st March
this year. Prior to then, I filled out lots of forms etc for inland revenue
to notify them of my status. I recently had a letter from them saying that I
will be treated as resident and ordinally resident and will have my foreign
income subject to UK tax. I have read all the leaflets etc and this as far
as I can see only applies if I spend more than 183 days in the UK in the tax
year. Since I am only having 20 days annual year for the year this is
unlikely to happen!

I have appealed - Seems little point having ex-pat status if I end up a
large tax bill at the end of it. I am due to come back to the UK on 1st
March 2007, but may stay out for an extra month so I am clear of a complete
tax year. I am paid by a Bahrain company and have a residence permit, work
permit etc, so I cannot see what the problem could be

Anyone able to help me to clarify ?

Thanks
C



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Re: Tax on overseas work (Should I really pay ?)

Chris wrote:
> Dear All,
>
> I recently started a 1 year(ish) contract in the Middle East on 1st March
> this year. Prior to then, I filled out lots of forms etc for inland revenue
> to notify them of my status. I recently had a letter from them saying that I
> will be treated as resident and ordinally resident and will have my foreign
> income subject to UK tax. I have read all the leaflets etc and this as far
> as I can see only applies if I spend more than 183 days in the UK in the tax
> year. Since I am only having 20 days annual year for the year this is
> unlikely to happen!
>
> I have appealed - Seems little point having ex-pat status if I end up a
> large tax bill at the end of it. I am due to come back to the UK on 1st
> March 2007, but may stay out for an extra month so I am clear of a complete
> tax year. I am paid by a Bahrain company and have a residence permit, work
> permit etc, so I cannot see what the problem could be
>
> Anyone able to help me to clarify ?

If you will be away for the full tax year the IR will normally treat
you as non-resident.
I guess it could be they are not yet convinced you will spend the whole
year; obviously there is cash flow advantage to be recognised as
non-resident from the beginning.
E.g. if you tell the revenue you will be away for a 'year-ish' or if
your contract implies you will not be away for a complete tax year.

In short I don't think a final decision is made until the end of the
tax year.