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Where Taxpayers and Advisers Meet

Working abroad

$teveUK
Posts: 3
Joined: Sun Aug 19, 2018 5:48 pm

Working abroad

Postby $teveUK » Sun Aug 19, 2018 5:51 pm

My son (23 years old) graduated in 2017 and currently lives at home in the UK is starting a 'job' as a cameraman in Botswana in Sept 2018.  He will be a self-employed contractor and invoice the Botswanan film company a monthly sum in GBP (although this may be paid in Botswanan currency).  The contract is for a year (if all goes well), although he has the option to leave for up to a month if another film project (in the UK) materialises and is likely to return to the UK (for a week or two) at least once or twice during the year.  He is currently unemployed and and has claimed universal credit for the last 3 months or so.  He intends registering as self-employed in the UK and will submit self-assessment tax returns from January 2019 onwards.  It is likely that his level of profit (particularly after deduction of travel costs) will be such that he pays little or no tax in the UK nor any student loan repayments (unless another project comes to fruition). Our understanding of the (highly complex) statutory residence tests is that he should be regarded as UK tax resident unless he ends up staying in Botswana for a complete tax year (eg to April 2020). Does this sound correct?  Is there anything else he needs to do to ensure he is taxed in the UK rather than in Botswana (where the tax free allowances are lower)?

AmanSood
Posts: 215
Joined: Mon Jan 09, 2017 4:12 pm

Re: Working abroad

Postby AmanSood » Sun Aug 19, 2018 7:31 pm

My son (23 years old) graduated in 2017 and currently lives at home in the UK is starting a 'job' as a cameraman in Botswana in Sept 2018. He will be a self-employed contractor and invoice the Botswanan film company a monthly sum in GBP (although this may be paid in Botswanan currency). The contract is for a year (if all goes well), although he has the option to leave for up to a month if another film project (in the UK) materialises and is likely to return to the UK (for a week or two) at least once or twice during the year. He is currently unemployed and and has claimed universal credit for the last 3 months or so. He intends registering as self-employed in the UK and will submit self-assessment tax returns from January 2019 onwards. It is likely that his level of profit (particularly after deduction of travel costs) will be such that he pays little or no tax in the UK nor any student loan repayments (unless another project comes to fruition). Our understanding of the (highly complex) statutory residence tests is that he should be regarded as UK tax resident unless he ends up staying in Botswana for a complete tax year (eg to April 2020). Does this sound correct? Is there anything else he needs to do to ensure he is taxed in the UK rather than in Botswana (where the tax free allowances are lower)?
Hi Steve

That's broadly right. your son would still be UK tax resident unless he spends a complete tax year outside of the UK. Also do keep in mind that simply being UK resident won't get him out of being taxed in Botswana as you would have to consider the tax residency position separately in Botswana. At a high level , if possible he should keep his days in Botswana to less than 183 days in any rolling 12 month period and spend the rest of his time in the UK. This should help to minimise the risk that he's actually considered treaty resident in Botswana but your son should also obtain tax advice in Botswana to ensure he's not triggering a tax liability.

Aman
Advising on UK employment, expatriate and personal taxes
aman.sood@e-taxconsulting.com.
+44 (0) 207 846 0155

$teveUK
Posts: 3
Joined: Sun Aug 19, 2018 5:48 pm

Re: Working abroad

Postby $teveUK » Sun Aug 19, 2018 8:02 pm

Aman

Thanks. I understand that Botswana has a double taxation agreement with the UK - does that mean he should be able to avoid being subject to tax in both countries if challenged? It's unlikely he'll be able to be in Botswana for only 183 days (approx 6 months) when he's on a 12 month contract (Sept 2018- Aug 2019).

Steve

RMC
Posts: 431
Joined: Wed Aug 06, 2008 3:35 pm

Re: Working abroad

Postby RMC » Mon Aug 20, 2018 10:56 am

Under UK-Botswana DTA your son will continue to be tax-resident in the UK, however be may be still liable to local tax on his earnings, however short his stay. He should consult a local accountant, or his employer /engager might be able to advise.

To preserve full NI contributions record (if needed) your son should complete the appropriate section on his tax return.

The deadline for notifying HMRC of self-employment commencing in 2018/19 is 5.10.2019.

maths
Posts: 7581
Joined: Wed Aug 06, 2008 3:25 pm

Re: Working abroad

Postby maths » Mon Aug 20, 2018 5:29 pm

It seems virtually certain he will remain resident in the UK under UK domestic law.

If he also is treated as resident in Botswana under their domestic law then under the DTA he will probably be treated as resident only in the UK.

Assuming this is the case, then he will be exposed to UK tax on his income and as he is likely to be in Botswana for in excess of 183 days he will be subject to tax in Botswana on his Botswana source income.
He will be able to offset any Botswana tax against any UK tax charge on the same income.

bd6759
Posts: 3107
Joined: Sat Feb 01, 2014 3:26 pm

Re: Working abroad

Postby bd6759 » Mon Aug 20, 2018 8:19 pm

The DTA says
The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein.
There will not be any Botswana tax unless he sets up a permanent establishment there.

$teveUK
Posts: 3
Joined: Sun Aug 19, 2018 5:48 pm

Re: Working abroad

Postby $teveUK » Mon Aug 20, 2018 9:43 pm

Thanks for your input maths. Its likely that his UK income will be minimal (if any) unless another project comes to fruition. Most if not all his income (probably less then UK tax free allowance but well above the Botswana tax free allowance) will thus be from the contract work in Botswana. So if he is taxed in Botswana he may have no liability for UK tax from which to deduct this.


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