People from the European Union who live and work in the UK need to ensure they are not caught out by changes to their tax obligations in their home country, an accountant from Baker Tilly has warned.
Rajiv Vadgama, associate director for Baker Tilly Tax and Accounting, said although a UK resident earning income in the UK will be taxed in the UK on that income, if they have not kept the tax office in their country of origin informed, they could end up paying tax to their home countries on top of what they pay to the HM Revenue & Customs.
He said: “Given the UK has tax treaties with most European countries double taxation is not a common issue. But HMRC can take some time issuing confirmation that an individual is a resident taxpayer.”
His comments come as a large proportion of long-term workers in the UK have not understood the need to complete annual filings, leading to some high penalties in countries such as Spain and Greece.
Reece Fallaize, senior technical adviser for international wealth advisory firm the deVere Group, said this was becoming a problem as people did not know whether they still needed to complete annual filings.
He added: “Another common problem we see is that a high percentage of British expats never file P85 form with HMRC before they leave the UK. The P85 tells HMRC that you are leaving the UK and HMRC will send you a letter acknowledging that you have left.”
Should clients not file form P85 then HMRC will expect an annual tax return irrespective of whether they have UK-sourced income or not.
He said: “With this in mind, our advice to clients is understand your obligations when you leave country ‘x’ and also the obligations of country ‘y’, where you are headed to.”
