Self-employed and foreign earnings deduction

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marky9074
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Thu Sep 29, 2005 9:36 am

I understand that foreign earnings deduction is not applicable if you are self employed. Can anyone expand on this and ways around it...

Cheers,

Mark
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Vixen
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Sun Oct 02, 2005 6:17 pm

Speak to a Marine Tax specialist.
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marky9074
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Mon Oct 03, 2005 7:53 am

Vixen wrote:Speak to a Marine Tax specialist.
I guess Seatax then? I hate paying people to do things like this......mumble grumble..
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marky9074
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Tue Oct 04, 2005 7:02 pm

Tried Seatax, no replies to my mails. Does anyone know the tax office that deals with seamen now? Is it Cardiff. Does anyone have the contact details?

Cheers,

Mark
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Tue Oct 04, 2005 7:31 pm

Hola Mark,

Try telephoning 01302 364673 for Seatax.

Regards,
GEF
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marky9074
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Tue Oct 04, 2005 7:47 pm

Thanks for the Seatax number..

Dodgy satellite out here, OK skype to skype, but skype to phone not so good. I will get Lynsey to ring them.

I am interested in actually speaking to the tax office though to confirm that FED is not applicable for self-employed.

I know some people are using a salary & dividend service as a work around, but doing this you do ultimately loose some of your pay (though not as much as paying tax)

Mark
Last edited by marky9074 on Wed Oct 05, 2005 2:20 am, edited 1 time in total.
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marky9074
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Wed Oct 05, 2005 2:13 am

Seafarers

6. Special rules for seafarers allow visits to the UK of up
to one half of the qualifying period - including visits of up
to 183 consecutive days.

Self-employed

7. UK resident individuals who are self-employed are taxed
on their business profits arising in the UK or overseas.
There is no relief equivalent to FED for self-employed
individuals who work abroad.
Ok, so I have confirmed that there is no relief for the self-employed....arse! Though does this apply to a self-employed seaman?
Last edited by marky9074 on Thu Oct 20, 2005 11:11 am, edited 1 time in total.
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marky9074
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Wed Oct 05, 2005 2:27 am

Hello Mark

I can confirm that if you are class as self employed then foreign earnings deduction cannot be claimed.

Who has classed you as self employed, the Inland Revenue or your employer?

Very few people are classed as self employed whilst working on vessels and perhaps your employer has just told you that you are responsible for your own pay and tax?

Anyway, please confirm so that I can look into this further for you.


Kind regards

Kathryn McAteer

Marine Tax Consultant
Ahhh finally got a reply...
Dear Mark,

This really is a bit more tricky to answer now.

You are working for and exclusively for Geocon and you have to abide by their rules but they appear not to want the responsibility of operating PAYE.

It is only really the Revenue who can give a ruling on your employment status so I suggest you contact your local tax office and make an appointment to go in and discuss your situation.

Best regards


Kathryn McAteer

Please note my personal e-mail address: KathrynMcAteer@seatax.ltd.uk
Last edited by marky9074 on Thu Oct 20, 2005 11:02 am, edited 1 time in total.
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Tue Oct 11, 2005 8:22 am

Contact details for tax man...

Marine Section,
HMIT Cardiff 1
Ty-Glas
Llanishen
Cardiff
Wales
CF4 5FN

(Tel: 029 2032 6077)
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marky9074
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Tue Oct 11, 2005 5:17 pm

Hi Mark,

With reference to the further correspondence, we are aware as to the difficulties experienced with regard to 100% Foreign Earnings Deduction and the self employed but normally find that once a contract is scrutinised by the Inland Revenue, the Inspector of Taxes usually regards the individual as an employee and thus the 100% FED invariably continues..

We have been involved in many disputes in the past with regard to self employment/employment status and can confirm that it normally depends entirely on the wording of the contract as to whether or not the individual is self employed or an employee. If therefore you could let us have sight of a copy of your contract we could respond more definitely to enable you to decide how you wish to proceed.

Regards,

Les Trotter
New Business Manager
Senior Tax Consultant
For and on behalf of
Ex Pat Tax Consultants Ltd

Tele: (0191) 230 3141
Fax: (0191) 261 2956
Last edited by marky9074 on Thu Oct 20, 2005 11:06 am, edited 1 time in total.
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Thu Oct 20, 2005 10:44 am

Hi Mark,

We thank you for your email/attachment of 11th October and can first of all confirm that despite what your "employer" states Is your employment position i.e. self employed, you were quite right in that the remainder of the contract certainly points towards you being an employee of the company.

Unfortunately the only way to be absolutely sure as to the Inspector of Taxes attitude towards your employment/Self Employment Status is to refer matters to the Inland Revenue Office/Reference dealing with your situation. We feel that you should possibly forward the "consultant agreement" to the Inland Revenue and explain your concern that whilst you have been regarded as a seafarer to date and qualify for a 100% FED this may change dependant upon the attitude to the Consultant Agreement.

Had you already been a client of ours we would automatically refer the Consultant Agreement to the Inland Revenue and then proceed accordingly on receipt of their response. As however we are not actually acting on your behalf we feel it would be prudent for you to submit the Consultant Agreement to the Inland Revenue and explain your concerns then proceed accordingly once a response/attitude to the agreement was received.

Yours sincerely,

Les Trotter
New Business Manager
Senior Tax Consultant
For and on behalf of
Ex Pat Tax Consultants Ltd

Tele: (0191) 230 3141
Fax: (0191) 261 2956
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marky9074
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Thu Oct 20, 2005 1:27 pm

Hi Mark,

Thanks for your further email enquiry and whilst we can confirm that you would not be "opening up a can of worms" by referring personally to the Inland Revenue with regard to your new contract, we appreciate your concern at taking this action.

At present our charge for dealing with an individual tax year is £329 inclusive of VAT and if we were dealing with this present tax year on your behalf this would be the fee and would cover not only our negotiations with the Inland Revenue but preparation of your Return of income at 5 April 2006. Obviously until you have access to our letter/enclosures of the 7 October you can not really appoint us as personal income tax agents but suffice to say there is no deadline for our commencing to correspond with the Inland Revenue with regard to the status of your contract.

We are still very firmly of the opinion that it is almost impossible for an individual who is working on a vessel at sea who has previously qualified for a 100% Foreign Earnings Deduction as a seafaring employee, to have their employment status changed because of a forced change of contract by an employer. Obviously UK based companies do not wish to employ people as employees under PAYE because of the National Insurance liability for the employer but we still strongly believe that the Inland Revenue will interpret your new contract as we have ie. as being that of an employee.

The Inland Revenue have in recent years been looking very closely into contracts of this nature because if they unfortunately consider this contract to be that of an employee they could then "open up a can of worms" but not for yourself. The problem would be Geocon’s in that we have known companies to be forced to operate PAYE against their wishes. We would not therefore wish you to jeopardise your position by presenting this contract to the Inland Revenue at this time so would respectfully suggest that you possibly discuss matters with the company who will no doubt appreciate your concern at losing your 100% Foreign Earnings Deduction and will obviously realise the implications for themselves if this contract was presented to the Inland Revenue. You could then advise us as to how you wish to proceed.

Regards,

Les Trotter
New Business Manager
Senior Tax Consultant
For and on behalf of
Ex Pat Tax Consultants Ltd

Tele: (0191) 230 3141
Fax: (0191) 261 2956
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marky9074
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Thu Nov 03, 2005 2:44 pm

Hi Mark,

Thanks for your further email of the 1 November and we can agree that Mr Statton does not appear to have grasped the situation.

Whilst the situation is not really urgent it would be dangerous to await the end of the present tax year to find that there was a large tax liability arising and we feel it would therefore possibly be advisable for you to go down the "offshore company route" with the minimum possible delay. This would obviously create expense on your part but it could take an awful long time to clarify your situation/contact satisfactorily with the Inland Revenue and if the Inland Revenue did cause problems with Geocon, you would not of course be their favourite "employee".

We find it hard to believe that Geocon do not appreciate your concern at losing the 100% Foreign Earnings Deduction because of a contractual change, forced upon you, and would have thought other individuals in the same situation would also have been affected? We would also imagine that Geocon have certain legal advice with regard to the drawing up of contracts and the wording thereof and that their legal representatives would have clarified matters with the Inland Revenue. As however mentioned it could take some considerable time to clarify the situation further to your satisfaction/benefit with no guarantee of success.

Regards,

Les Trotter
New Business Manager
Senior Tax Consultant
For and on behalf of
Ex Pat Tax Consultants Ltd

Tele: (0191) 230 3141
Fax: (0191) 261 2956
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marky9074
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Tue Nov 22, 2005 12:06 pm

Hi Guys,

I have found a solution from the nice people at GSS. Total deductions are £7.50 a day for insurance and a further 4% commision. The 4% commission would cover the processing of your contracts, payment and recovery of expenses where necessary. Putting your contracts through GSS Ltd. would also give you the benefit of continuous employment through one company which could assist with your seaman's tax allowance for example.

Contact:

Neil Lawler @ GSS Ltd.
Tel +(00)350 46783
Fax +(00)350 46785
neil@gssoffshore.com

Enjoy....

Mark
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marky9074
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Wed Mar 15, 2006 2:06 pm

Hi Guys,

I have an even better solution now that starts at 4% and gets reduced as you introduce people to the scheme. This option is better for me as I dont have to pay for insurance, when I am already insured by the agency...

....and also you will be in continuous employment for tax reasons.

If anyone is interested let me know.

Mark
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