P85 form

[forgetful]

Hi people,

I would be grateful if someone could explain the implications of failing to complete a P85 form before leaving the UK. I am in this situation after having left to start work in a country that shares a double tax agreement with the UK, in 2007. Previously I was a student in the UK and as such was not liable for UK tax. My question is very similar to one I found by searching this site:

http://www.taxationweb.co.uk/forum/discuss.php?id=17428

However, in this case the person seems to be exempt from the ruling as he has been abroad for more than 6 years.

In my particular case I envisage returning to the UK permanently within the next year or two. How will things stand regarding bringing back savings I've accrued whilst working abroad?

Thanks in advance,
John

[JSK TAXATION]

John,

Form P85 is not a statutory form; in other words it is not a form that you are required to complete when leaving the UK. However, where you wish to claim non UK residence (and this will affect the way your income is taxed in the UK) then you should strictly ask HMRC for a tax return to complete covering the tax year in which you left.

Completion of a P85 is obviously useful though particularly if you wish to claim a repayment of tax for the period up to the date you leave, which otherwise would have to be left until the end of the tax year. HMRC have said that they will not ask for a return to be completed in situations where a taxpayer has completed a P85 so it can avoid the need to complete a return too.

If you left the UK to take up a full time contract abroad which covers a complete tax year then all earnings relating to the employment will be exempt from UK tax. Similarly all foreign source income will be tax free too since you will be treated as being not resident in the UK for the duration of the contract.

If this is not the case, then generally where the employment lasts more than 183 days in any given tax year, under the OECD model tax treaty, the country where you are working will have primary taxing rights.

In this latter scenario, since you will remain resident in the UK, foreign source income remains taxable on an arising basis i.e. it matters not whether it is remitted or not.

I hope this helps. let me know if you would like advice on a professional basis. Kind regards,

John S King
Chartered Tax Adviser
www.taxation-advice.com

[forgetful]

Hi John,

Thanks for your helpful reply, it's clarified the situation for me now.

Best wishes,
John