Non Residence and 9/11

[ian.wright@beechams.]

Keeping it short. I have a client who was working in the US for 18 months and returned to the UK after witnessing the 9/11 terrorist attack.

He had left the UK to work in the US permanently (US branch of his company). After 9/11 he returned to the UK.

In the 18 months out of the UK he was unfortunetly not out for a complete tax year.

He filed Returns on the basis that he was non resident.

The IR have now assessed him on all income earned in the US adding up to £40,000.

Furthermore the IR decided to demand payment today, 3 days before Christmas.

Is there anything at all that can be done?

[Taxbar]

Ian,

Is he getting full credit for US taxes paid on the income?
Did he file as US Resident in his period in the US?
In which case, you should consider whether he could be Treaty Resident in the US during the period under the tie/breaker provisions,
therefore overriding the UK Domestic law. I think you will need to consider the old treaty.

I would consider an appeal on the above basis, if the facts fit.


Daniel Feingold
Barrister(NP)
STP
info@stratax.co.uk

[ian.wright@beechams.]

Daniel

The IR have made a calculation for US tax but I am unsure whether this is correct taking into account Federal/NY state and social security deductions!

I do not think he filed any US Returns although various visas were granted. Most of the tax paid was from the UK London office but then changed to the US office where US taxes were paid.

His father is US resident and he was about to get his green card.

I think he should have filed a US Return and wonder if there is any hope in getting this Treaty Resident application.

He was in US from Dec 2000 to January 2002.

I think he really needs help on this as £40k plus interest and penalties is at stake!

[expattax]

Hi Ian,

Looks a bit of a mess to me.

As he is clearly a US resident for the entire calendar year 2001 a Federal and New Your State and possibly City tax returns are due.

Thus as Daniel informed you I would claim Treaty releif for the two part UK tax years 2000/01 and 2001/02.

It depends whose his employer was as to which country you pay Social Security Taxes. Let us hope the US taxes paid were sufficent as the interest and penalties for the overdue tax will be at least 25% of the tax owing.

If he needs any professional assistance to file both US and UK tax returns please let me know.

Kind regards
Merry Christmas

Mark J Hooper
US Enrolled Agent

[ian.wright@beechams.]

Mark

UK Returns have been filed which resulted in tax repayments. It is this in essence what the UK taxman wants back.

As for the US side I do not know.

This is obviously very serious and needs careful consideration.

I need help with the US side of things, especially if it mitigates part of the UK side. But of course I do not want an even worse US side of things.

Thanks for yyour help

Marry Christmas