Tax Return 2010 and Residency

M

mrcontractor

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Hi all,

I am looking for some guidance relating to my tax return for 2010 and I would really appreciate some help.

I will list some facts to outline my situation:

1. Jan 2010 - June 2010: I was unemployed and claiming job seekers' benefit.

2. June 2010 – November 2010: I got some IT (contract) work in the UK. Although the work was in the UK, I was invoicing an Irish agency. I didn’t form a limited company; instead I opted for the sole trader option. For the first month I was travelling back to Ireland at the weekends. After the first month, I rented a place and was permanently in the UK. I charged VAT on top of my fees and paid all VAT collected during this period to the revenue. I didn’t pay any tax on the income earned during this period.

3. November 2010 – April 2011: The initial contract was for six months. It got renewed and I decided to form a limited company in the UK on the premise that this would be more beneficial in terms of taxation. I invoiced the Irish agent from the newly formed UK company (no VAT was collected). I paid income tax on any salary or dividends withdrawn during this period. I plan to make a return (Corporation Tax) to the HMRC in April 2012 for the period (April 2010 - April 2011).

I assume that I am not liable to pay any tax in Ireland for the period Nov 2010 – April but obviously do have to make a return for the period June 2010 – Nov 2010.

Can someone confirm this assumption?

Thanks in advance.
 
This is a very complex situation.
Did you seek any advice before you set up the UK Company?
If you remained Irish resident, the UK company could be a dual resident company, and this may mean that you need to file accounts and Corporate tax returns in Ireland.
This is not straightforward, and I suggest you get professional advice.

www.taxingtimes.ie
 
Regarding your personal tax situation in Ireland, firstly you need to establish your residence situation.

Have you left Ireland permanently? If not, how long do you intend to stay abroad? What dare did you leave Ireland? What are your visits back to Ireland likely to be?

The Irish taxation of the Company will depend on your personal residence situation, and that needs to be established first.

www.taxingtimes.ie
 
See post here on this topic [broken link removed]

You should have claimed s822 in 2010 from time you became permanent in UK. This is for employment income only. All other income is subject to Irish Tax. You just leave UK employment income out of the Form 11 if Revenue approve the relief.
 
Hi

Be careful here. Although I am not an expert in UK taxation of limited companies it looks like you and your UK company may be caught by IR35 and MSC legislation.

Below from HM Revenue & Customs web site.

Managed Service Companies (MSC)

On 6 April 2007 Chapter 9 ITEPA 2003, more commonly known as the Managed Service Company ('MSC') legislation, was introduced.
The MSC legislation applies to individuals providing their services through intermediaries which meet the definition of a MSC.

All payments received by individuals providing their services through MSCs are subject to PAYE and National Insurance contributions.


The MSC legislation applies equally whether an MSC is based within the United Kingdom or outside the United Kingdom.
Where the PAYE and NICs debts of an MSC cannot be recovered from the company, HMRC may transfer the debt personally to one of the following:

  • the company's director
  • the MSC Provider
  • other third parties




Go and get a competent UK accountant to look at this ASAP.


Kind Regards


Capnhand
 
thank you all for your helpful comments.

To answer the question rasied re my residency - I left Ireland on 1st June 2010 and I intend to stay in the UK permanently - visiting Ireland once every 2-3 months.

I have a UK accountant who has reviewed my contract and deemed it outside the scope of IR35. My assumption was that I would have to make a return of all UK income from Nov '10 (as per 3 above)...

I am still unsure if I need to pay income tax in Ireland on the income earned from June 2010 and November 2010 (when I formed the Uk company).

confused.....

Perhaps I need to speak to an accountant in Ireland.

Thanks again...
 
paddy199,

thanks for your post.

Can I check if I understood what you have said:

I need to claim s822 from Nov 2010 - this will mean that all UK (employment) income will not be subject to Irish Tax.
Income earned from June - nov will be subject to Irish tax and should be declared via the usual from 11.

Is this correct?

Thanks,
 
I would say from the start i.e. June. I think otherwise UK would have primary taxing rights (UK permanent establishment) and Ireland secondary taxing rights (Irish tax resident) with a credit in Ireland under the DTA for UK tax deducted.

s822 may not work now if you are tax resident in Ireland in 2011. Thats why 'intention' is important - you make claim at time of leaving no problem if you do become tax resident in 2011. It was your intention but things changed etc.

However, in your case, its going to be fact now. Intention isn't relevant to you so late in 2011.
 
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