UK Resident, Italian Employer

[sh2108]

Hi I was wondering if anybody could help, I have asked this question to my tax office and they said they didn't know!!! My partner worked for a UK company which went in to liquidation. They transfered him to a new company which they opened in Italy. So he lives in the UK, travels the world to do his job and is now employed by an Italian company.

Does he pay tax in the UK and in Italy or just in the UK or just in Italy. His employers haven't brought it up as an issue (they said they didn't know the social, legal or economic implications of being employed by an Italian company) but we really need to know where we stand.

Thanks in advance for your help.

[Andy Wood.]

Hi sh2108,

Difficult without more facts.

It's likely to depend on his residence (for UK and other juridictions tax purposes) and his domicile status. You say he is UK resident. Is this from a tax perspective?

Subject to the above, could also depend on where he carries out his duties.

You may wish to consider bending the ear of an international specialist.

Cheers
Andy Wood
Chartered Tax Adviser

awood@clbcoopers.co.uk

[sh2108]

Hi Andy

Thanks for your reply, I said he is a UK resident because he "lives" in the UK ie we jointly own a home in the UK. As he previously worked for a UK employer he paid income tax in the UK. He was employed to do his job from a UK base office. They will still have a "physical" UK office but it is owned by the Italian company (xxxx .srl) He has been issued with an Italian mobile and an Italian credit card in the name of this Italian company!

His work involves worldwide travel for up to 3 weeks at a time and this could be anywhere in the UK, Europe, Russia, South Africa, South America etc.

I don't know if this is relevant but his contract didn't change when they transferred him to the Italian company.

Does this help any or should we simply contact an international specialist like you suggest (Andy do you specialise in international?)

[kirstie.williamson@a]

Your husband's employer is not being very helpful by saying that they don't know any of the tax or legal requirements for employing somebody in the UK. This is sheer laziness and probably an unwillingness to pay professionaol fees - instead relying on your husband to sort it out.

Here are a few pointers:
1. If he has a UK employment contract then he should be protected by UK employments laws - such as statutory rights to redundancy, paid leave, paternity leave etc but he would be advised to have his position checked by an employment lawyer, preferably one with international experience.

2. he should be paying UK income tax and Natioanl Insurance by PAYE. If his employer does not have a UK presence then your husband must operate a PAYE scheme himself and make the required withholdings and payments to the revenue on a quarterly basis. If this is too onerous ( and it will be time consuming to complete all the relevant forms as well as complex for him if he does not have the requisitie knowledge and there are penalties for mistakes) then a payroll bureau can do it for a fee - the company should pay.
3. If he is receiving benefits - even just payments of business expenses - then the company should prepare a form P11d so that your husband can put the benefits on his tax return. He can then claim a deduction for the business expenses incurred.Plld's are notoriously easy to get wrong and so professional help will be required ( £3k penalty if they are wrong).
4. NIC - if he is not paying UK NIC then he is losing his entitlement to a state pension not to mention incapacity benefit, jobseekers' allowance etc etc. He can make up payments for lost years if he gets in touch with HMRC now.
5. Your husband's presence in the UK may generate a corporate tax liability for the Italian company and they may also be required to pay employer's NIC but this is an issue for them rather than your husband.

These are just some basics. Your husband should speak to his HR department - whats's happening about his company pension for example if he has one ? Does he have company insurance and private medical cover for all these trips abroad ? Is he spending long enough in any one country to become liable for tax there too ?

But my primary concern would be to get the NIC and PAYE position regulated. the HMRC employer's helpline should be able to provide guidance.

KW