dual residency

by **manche** on Sun Sep 11, 2011 4:47 pm

Hello,

I am a tax resident of both the UK and another EU country. After consulting the relevant DTA I am sure that I am a resident of the other country.

Is it enough to inform HMRC about this via letter or do I have to submit a full tax return?
I have never lived in the UK prior to 2010 before hence no previous tax returns

My UK income is negligible.

Regards,

by **maths** on Sun Sep 11, 2011 7:51 pm

What is the amount and types of UK source income?

by **manche** on Mon Sep 12, 2011 8:49 am

savings account interest totalling 5000 pounds.

by **manche** on Mon Sep 12, 2011 6:45 pm

Anyone?

by **maths** on Mon Sep 12, 2011 7:55 pm

You seem to be in a bit of a hurry?

Your situation is from a purely technical perspective a bit tricky, I think.

Arguably you are under no requirement to either file a tax return or notify HMRC of chargeability even though you are UK resident (whether dual resident or not).

However, this assumes that you are non-UK domiciled and subject to UK tax on the remittance basis re your non-UK source income. This in turn requires that you make a formal claim for remittance basis treatment which needs to be made as part of a tax return.

In short, therefore, whilst you can simply write a letter to HMRC I suspect that all they will do is to send you a tax return (plus relevant Supplementary Pages) to complete in any event.

I would therefore request a tax return; declare your UK source in come only; and claim non-residence under the DTA and non-domicile status at the same time.

by **manche** on Mon Sep 12, 2011 8:00 pm

hi maths,

I did not want to claim under the remittance basis but on arising basis. I was under the impression that by claiming residency abroad under a DTA the remittance basis did not come into it and also since my UK funds are less than the personal allowance no tax would apply.

Am I completely wrong?

by **maths** on Mon Sep 12, 2011 9:02 pm

I did not want to claim under the remittance basis but on arising basis. I was under the impression that by claiming residency abroad under a DTA the remittance basis did not come into it and also since my UK funds are less than the personal allowance no tax would apply.

No you're not wrong ie if under the DTA any dual residence status was resolved in favour of the non-UK country then non-UK source income would not be subject to UK tax and in relation thereto the remittance basis would be irrelevant.

If your personal allowance exceeded UK source income no UK tax charge arises.

The issue is how to get to this point.

Hence my suggestion to complete the tax return et al. It may be, that despite your assumption, that any dual residence is resolved in favour of the UK. In this case your foreign income will be subject to tax on the arising basis unless remittance basis treatment has been claimed (the £30,000 charge not applying to you i assume).

by **manche** on Mon Sep 12, 2011 9:38 pm

Thanks.

a) I've had a look at the help sheet 302 and there is a section and I am not sure if my UK income should be listed on page 11 for full relief in H302 or whether it should ne listed in the uk income section of the main SA document.

b) correct the 30k would not apply IF I were to claim remittance.
Cheecky question now, my wife is here in the UK with me but my brother and sister are italian based. I am italian and 97% of my assets are in Italy. I am of the opinion that under the second rule of the tie breaker I can be considered to be italian resident. I also have a certificate from the italian authorities that staes that for them I am based there for tax purposes. Is this going to stick?

by **maths** on Mon Sep 12, 2011 11:12 pm

The UK source income (appears to be interest on bank deposits); in which case include on 302 sheet but exclude from Tax Return.

Under the DTA, 10% may be deducted from interest (as compared to the normal 20%). The partial relief section should thus be completed effectively reclaiming 10% assuming 20% has been deducted.

However, as your personal allowance exceeds the £5,000 ultimately no UK tax is due in any event and any tax paid will be refunded.

by **manche** on Tue Sep 13, 2011 8:31 am

thanks again.

Unfortunately in the summer I hastily requested a unique tax payers reference so now I am landed with an automated response from hmrc asking for an SA.

Should I still just write a letter telling them I don't think a SA submission is needed due to my circumstances or should I submit an SA?