Employer asking for portion of my tax refund

[freetz]

Hello,

New to this forum - first post. Hoping you could help.

About 18 months ago I was relocated to my employer's UK office, working for their UK entity. I was assigned to our London office for approximately 10 months, and meanwhile had been relocated back to the US. During the period of my UK assignment, I spent very little time in the UK (less than 50 business days). As a result, I'm considered to be a non-resident in the UK, and also due a significant tax refund (mainly because I was working mostly outside of the UK). As part of my relocation I was provided a generous relocation package by my employer.

A few days ago PwC, which was hired by my employer, finished preparing my tax return for the previous year. They claim my employer is entitled to a portion of my refund (almost 50%), because it's their share of the tax liability which they deserve to receive. This "share" of the tax liability was generated when they provided me with the relocation package.

My question is - does this make any sense?

According to my own reasoning, the money I receive as a tax refund is for tax that had been withheld, and not for actual expense incurred by my employer. If my employer truly deserves a refund because of my individual circumstances, shouldn't they take care of it through their own account with HMRC? Why would they request it through my own personal self assessment?

Would really appreciate some insights!

Thanks!

[bd6759]

It possibe that as part of the package your employer agreed to meet some of tax liabilities, and are only wanting back the tax that they paid but is not actually due?

For UK purposes, the tax is deemed to have been paid by you and will be repaid to you unless you ask for it to be paid elsewhere. Whether you are required to do this is a legal question based on the terms of your assignment, not a tax question.

[The Ivy Office Ltd]

Hi

Your Uk tax return is a legal declaration made by you and although PWC have prepared this they cannot force you to redirect any refund . I suggest you take the refund ( Did you claim (Overseas workday relief) for you non UK duties?

You then need to review your terms of your UK assignment to see if you obligated to refund this. Some agreements have equalisation arrangements for tax to ensure that you are not financially disadvantaged by working in different tax jurisdictions.

Dennis

dennis@taxesclear.co.uk

[DavidTreitel]

Was this tax that you paid at all; or did you instead have withheld a hypothetical stay at home tax? What does your tax equalisation calculation say you owe; if anything?

[freetz]

Hi All,

First of all - thanks for your help and replies!

The reason my employer (through PwC) is asking for a part of my return is because of the relocation package I received, which was grossed up. When this benefit was paid and grossed up, a fairly high tax rate was assumed (almost 40%). As I had mentioned in my first post, since I spent most of my time outside of the UK during the assignment, my effective tax rate turned out to be very low (less than 5%). As a result, my employer is asking for their part of the refund which is resulted by over estimating my tax rate for the year. Although I'm not legally obligated to pay this back (I think....), I'll obviously will since this is not my money.

Thanks again for your help!