overseas rotation Tax solutions..........

[ibit]

After spending endless hours searching the web I have stumbled across this very useful site and was hoping i could impose on your generosity and experience to point me in the right direction.

I am about to undertake a new position in Qatar for Shell this will be through an agency ( NES Global). I will be working a 28/28 rotation on a residency visa on a day rate of $700 a day. I will spend most of my leave at home in the UK with my family.

Previous to this I worked in the UK for many years which my employer paid all taxes. I started work offshore on a vessel in May 2010 (35/35 rotation)and returned home to the UK in April due to family reasons. Unfortunately because I did not complete a full 365 day cycle I do not qualify for seafarers earnings deductions.

The question I have is which is the most tax efficient way of dealing with my new contract ? I have spoke to several companies and to be honest I do not trust any off them, they promise various ways of reducing my liability to almost zero but provide no hard facts all they are concerned with is signing up to a monthly payment scheme.

I have tried to speak with some guys i know who also work on rotation and they are basically doing nothing as they believe they are under the tax mans radar........ Although like most of us I would like to pay as little tax as possible this option is just to risky for me.

I have spoke with a company in the Isle of man who advice if I can get a letter from my new employer stating I live in Qatar mentioning an address I can open up an offshore company with obvious benefits...... this also is very appealing but I am not sure if it is legal or possible.

With regards to a UK limited company I also believe I am within the IR35 scope as although I will be a contractor I will be working for Shell and only Shell. I have looked in depth into this subject as yet........

It all appears to be a bit of a minefield to navigate through at the moment and find the best possible solution so I can then choose the right accountant to act on my behalf.

I see from previous posts that there are some very knowledgeable members on this subject and would really appreciate some friendly advice to a newbie like me. I plan to stay in this line of work for a good few years if I possible and would like to get off to a good start.

If there is ever anything I can do in return please do not hesitate to ask.

Kind regards

[thehiker99]

Ibit
It sounds to me that as long as you follow some basic rules, there is no reason that you should not earn your Qatar money tax free:-

A few salient points:-
-See a good accountant asap. Do not rely on, as you said "being under the taxman's radar." This works for a lot of people, and a lot of people get away with it, but if you are caught, HMRC will take you to the cleaners. I know of one personal case, where a guy had to sell his house, to pay 10 years of back tax. get the accountant to present your case to HMRC, and get a ruling on your position. I can recommend one. E mail me. See personal message.
- Ensure that you have a proper written contract, with clear start and end dates. Ensure they are signed by your agent and Shell. When one contract finishes, make sure the next contract starts the next day. Do NOT have gaps between contracts, otherwise HMRC can say that your work is not FULLTIME.
- Ensure you keep meticulous records of your movements in and out of the UK, and keep all tickets and boarding passes. Don't rely on "On Line" boarding passes, get one at the airport. Having an On Line boarding pass, does not mean you took the flight.
-Keep meticulous records of all Credit card/debit card/cash machine transactions when outside the UK. Keep all the slips.
- As long as you do this work, on a proper contract, until at least 5th April 2013, AND you limit your time in the UK to less than 91 days a year, you should be able to claim your overseas income, tax free until that date, and then onwards on a rolling year basis.

I wouldn't worry about IOM companies, and all that stuff.

As long as you satisfy the basic rules of:-
1/ Full time overseas work
2/ Do it for at least one tax year,
3/Limit time in the UK to less than 91 days a year. Note also that the day you come into the UK counts as a home days, the days you leave counts as an out day.

You don't need offshore companies, and bank accounts. I bank with HSBC UK. (I do similar work to you)

I don't know too much about IR35, because I work as a consultant in the Oil business, as an individual.
I have heard, and this is only heresay, that it is not an issue, if you work full time outside the UK.

Finally there are plans to bring in a Statutory Residency Test. It was supposed to come in April 12, but will now be April 13. The HMRC document on this subject quite clearly had the concession for Overseas workers. I can send the document to you if you want.

If you want to E mail me, I’ve sent you a private message with my E mail address.
The Hiker.

[thehiker99]

Ibit

I've been reading your posting again, and note your comment about paying as little tax as possible.

Unfortunately the way the UK expat tax rules are framed, as an individual, you either pay zero, if you satisfy the rules set out in my first response, or you pay the lot, as if you were working full time in the UK. As far as I know, for an individual, there is nothing between the two extremes.

Working as a Ltd company, you will pay less than as an individual.
I researched it earlier this year.
You'd need to see an accountant.


Le Randonneur quatre vingt dix neuf.

[etf]

Hi Ibit,

I agree with the advice that the Hiker has given you. Provided you have written evidence to support full-time employment overseas for a complete UK tax year (6 April to 5 April) attaining the important not resident and not ordinarily resident status should be achievable provided you are able to restrict your return visits to the UK to permitted levels e.g take holidays outside the UK with your family to absorb some of your leave time.

In some situations, an offshore bank account can be advantageous to a UK bank account and you will find that most UK banks are represented in the Channel Islands etc. Examples where this might apply include:

i) in the tax year that you return to the UK, interest on an offshore account that is closed prior to the date you return will not be liable to UK tax, whereas UK bank interest will be taxable income.

ii) if you have UK income e.g. letting income, that fully absorbs your personal allowance in a year of non-residence, it would be better to receive interest from an offshore account (not liable to UK tax) rather than UK bank interest that remains taxable.

If you think you will be able to attain a not resident and not ordinarily resident status you should notify HMRC of your departure by completing form P85 and a UK tax refund will usually arise if you were employed here prior to leaving.

We typically charge £120-£150 for dealing with the tax year of departure and associated advice where no UK letting income is involved.

Kind Regards

etf

http://theexpatriatetaxfactory.com

[ibit]

Hi Guys,

Thanks for your detailed response.

Unfortunitly due to the fact i have a young family and wife with work comitments becoming a non resident is just not an option for me at this current time. I will be returning to the UK on my leave and even adding a few holidays would not bring me anywhere near the 91 day rule.

I am sure there must be many people out there in a similair position and was hoping to find out how they manage thier income, although from what I have found out so far a UK ltd company appears to be the most viable option with the exception of complex avoidence schemes.

If there is anyone who for whatever reason works overseas on rotation and returns home to the UK exceeding the 91 days and could recommend a good and trustworthly accountant I would be very apprecitive if you could pass on there details........

Thanks again

Ian

[thehiker99]

Ibit

I hear where you're coming from.
It can be very difficult to stick to less than 91 days a yera. It becomes a real bind after a number of years,especially if you have a young family.
As I already stated, as an individual, if you are classes as resident, then all your worldwide income is taxed in the normal way.

Operating as a company?? I did look at that option earlier this year, and the overall the tax bill certainly was less than operating as an individual.

It operates around you and your wife being company directors, each drawing a salary that keeps you both in the 20% band. Further capital can be withdrawn as dividends I believe.

Recommended accountants?
I could suggest Johnston and Carmichael in Inverurie, near Aberdeen, or Nick Bradford FCCA, in Montrose.
I realise that you may not live anywhere near these places, but I'm sure they can do it all by E mail.

Good luck.

The Hiker 99

[ibit]

Hi Hiker,

I agree it is quite frustrating, but family always comes first.

Cheers for the recommendations, coming from the west cost of bonnie Scotland I am sure communicating with these East coast firms will have some challenges.......lol

On a serious note though thanks for your input and time and i will certainly make contact with them and keep you posted on my progress.

Cheers again

Ian