Non Resident Self Employed Tax Return Queries

[Ernie22]

Im sorry for the long-winded message here but I’m hoping the community can give me some pointers to ensure I am doing the right thing by HMRC. I have spent hours trawling the internet but have not found all the answers i need.


Scenario:
I am a British Citizen and Non-Resident for UK Tax Purposes. I left the UK in 2009 and had received a partial tax refund for that year. This was my last dealing with HMRC.
I have been working in Singapore for 8 years paying my income tax there and would be considered a tax resident there.
I quit my job in November 2018 and have started working on my own Amazon business which is growing fast.
The nature of the business is that Amazon pays me Royalties on products sold on their US/UK/Germany Marketplaces (90% of the revenue is from products sold on Amazon US). Amazon only accepts bank accounts from certain countries so I have been paying the Royalties by remittance into my old UK bank account. I have not setup a business entity for this; I just use my own name and my parents address in the UK. Given that i can work from anywhere i plan to travel often and will not become a tax resident in the UK in the future.


My first assumption is that although 90% of the income is sourced from royalties paid on sales on Amazon US, it would be considered by HMRC as UK income and not “foreign sourced" because I am having Amazon send it directly to my UK bank account.
Assuming the above is correct, I will therefore need to pay HRMC income tax on all of the profits that were sent to my UK Bank Account.
After doing some reading my initial plan was to register as a “sole-trader” at my parents address in UK and do a self-assessment tax return. However, given that I am a non-tax resident the website says:


“You cannot use HMRC’s online services to tell them about your income if you’re non-resident. Instead, you need to:
• send your tax return by post
• use commercial software
• get help from a professional, like an accountant
Fill in the ‘residence’ section (form SA109 if you’re sending it by post) to tell HMRC you’re non-resident. Fill in any sections relating to your type of income.
“


Questions:

Can anyone please confirm this is the right path to be going down and that I should submit a postal tax return?

Would you recommend other options e.g. Submitting via an accountant or using one of the online software options?

One final question I have is around the “personal allowance”.

“If you’re not a UK resident, you have to claim the Personal Allowance at the end of each tax year in which you have UK income. Send form R43 to HM Revenue and Customs (HMRC).”

I understand that I might also be eligible to reclaim the personal allowance after filing tax by completing form R43 as above,

Is the personal allowance impacted by the employment income that I earnt in Singapore before I quit my job, or is it granted regardless of your foreign sourced income?




Thanks in advance for any advice that you can offer me

[AnthonyR]

The first thing I'd say is that this is not formal advice - please don't rely on anything in this post! The second is that if the business is becoming successful then you should follow HMRC's third point and:

• get help from a professional, like an accountant

That means pay an expert for advice so you get it right (and you can sue them if they don't get it right!). The cost of tax advice will be minuscule in comparison to the cost of getting it wrong if you're successful.

In terms of selling internationally via Amazon this is a complex area and each country you sell in will have it's own complications.

The answer to the question of whether you have to pay tax on all profits in the UK is probably no. The fact that the proceeds of sale are paid into a UK bank account doesn't make the US/German transactions a UK trade. Obviously the UK element is a UK trade, but where you are a non-UK resident selling products to non-UK residents outside of the UK this will not be a UK trade. It will, however, be a US and a German trade and you will likely need to be reporting in both of those countries.

The other complications you'll need to bare in mind if you are selling in the US and Germany is sales tax and VAT. I have no idea how the Amazon platform deals with your international sales, but each state you sell into in the US will likely require you to register for sales tax and Germany will likely require you register for VAT (as will the UK).

You will also need to consider your Singapore tax position, although many countries like this will not tax you on your non-local income.

Going back to basics - go and take formal advice.

[Ernie22]

Thank you for your response Anthony! You have definitely given me some things to think about. I will go ahead and seek some professional advice. Id welcome any recommendations from the community

Fortunately, i don't think i need to worry about the VAT/sales tax part because In this case i'm not a traditional Amazon Seller. In this scenario Amazon is actually selling the products and they pay me a Royalty for each product sold (From the Service Agreement - "For each sale of a Product by Amazon, the responsible Amazon Party will pay you a royalty")