resident not domiciled - income from abroad trading

[Giav08]

Hello,

Thank you in advance to all who will answer to my question. My situation in the following:

I am resident on UK but not-domiciled.
I am the director and the owner of my LTD company.
I am employed by my LTD company with a monthly paycheck.
Because I am a Director I am also a registered as self-employed (sole trader).
The company is doing fine and all is ok.

Now I have the opportunity to make a personal trade abroad UK as following:

- I will buy a used machine tools in Italy with an Italian contract issued in Italy. (0% VAT applied - final destination Egypt).
- I will pay the machine to the Italian supplier from my Swiss account.
- I will sell the used machine tools in Egypt with an Egyptian contract issued in Egypt. (0% VAT applied - final destination Egypt).
- I will receive the payment from Egypt on my Swiss account.
- I will deliver the machine tools directly from the Italian supplier using the Italian custom with my personal EORI number (not the company one).
- No VAT, No Intrastat because the final destination is outside EC (Egypt).
- Nothing will be related to UK (no contract, no money, no custom, no transport).

I am taxed on remittance basis as UK resident but Non-Domiciled.
Will be the net income from this abroad trade taxed on UK as part of my UK income ?
Or will be consider as a foreign income and not taxed because I am resident not domiciled on remittance basis?
I was not able to find any answer on the Income Tax (Trading and Other Income) Act 2005 if you can help me I really Appreciate it.
Best regards.

Lucio Giaveno

[bd6759]

Directors are not sole traders unless they are carrying on a trading activity as well as their directorship. As you correctly state, you are employed by by company.
What is your UK trade? And what is the trade of your UK company? Is it similar to this proposed venture?

[Giav08]

Thank you for your answer. You are right.
Mi exact condition is employed by the company and also self-employed being the director of the company.
The company is making trading and services about machinery that covers many activity.

This particular trade will be different because it will be made phisically on all his aspect, outside UK.
Contracts, payments, transport, customs, everything will not have anything to do with the Uk.
The only connection will be my personal Eori code that will be use by the Italian custom.
If this will be a problem can be use the Eori of the first supplier instead of mine.

Let meknow if you need more information.

[maths]

In practice it is virtually impossible for a UK resident (albeit non-UK domiciled) individual to carry out a sole trader trade which has a foreign (ie non-UK) source and hence remittance basis treatment is not possible.

[Giav08]

Sorry Maths,
Why is impossible ?

I go phisically in Italy, I buy the machine and I pay the machine from my not UK account.
I load in Italy the machine on a container, I make the Italian custom and I deliver the machine in Egypt.
The Egyptian custumer pay me on my not UK bank account.
What is wrong with it ?

The problem is if the profit of the trade :

- It will be consider part of my Uk income therefore Uk tax will be apply

or

- It will be consider in remittance base as part of my foreign income.

For example can the ITTOIA2005 - Part 2 - Chapter 2 - Point 6 be apply to my case to justify the income as not UK taxable ?

[Giav08]

Just some more info:

https://www.gov.uk/hmrc-internal-manual ... l/bim15010

If a resident of the UK carries on a trade wholly abroad the profits are treated as relevant foreign income. This enables the taxpayer to claim some additional deductions in computing the profits and in some cases to claim to have the profits charged on the remittance basis. For the remittance basis see RDRM31000 onwards. For the deductions see BIM47712.

Any opinion ?

[maths]

The issue is to identify the "source" of the trading income which is based on case law [see Ogilvie v Kitton and the Sao Paulo case by way of example).

[Giav08]

Hi Maths,
I an not able to find the case, thank you if you can explain.
The "source" of my trade abroud UK is an Italian consultant that offered my the machine in Italy.
He will invoice his service to me and I will pay him from my not Uk bank account.
Regards.