joneld

hello to all im after some advice myself and my wife are looking into moving to spain i work on a gas rig in the north sea 2wks on 2wks off is there away of not paying income tax in the uk as i will be flying it to the uk and then straight away going to the rig and the home again. there seems to be a couple of people ive spoken to have told me that when they get paid they do not have there tax taken of them they just pay national insurance a month

if anyone can help please advise me

lee thanks

IONman

Hi Like you I live in Spain and work in the north sea, I also have a business in Spain.
I have tried with the UK taxman not to pay tax however they are adamant that I have to pay also NI which is not good either as with a business in Spain I also have to make social security payments there as well.

Now there are ways you might be able to get away with it but it depends on where your rig is in relation to the UK, if it's on the UK continental shelf you'll pay tax, if it's an FPSO type boat mobile drilling rig you may well be able to escape.
Be aware though that you may well be liable to pay tax in Spain so be careful.
You are responsible for paying the tax so if you opt not to and get caught then they will want back tax plus a charge for late payment.
I did go down the rout of employing a Spanish accountant but all he could come up with was even after having paid UK tax I may well be liable for additional tax in Spain as my earnings exceeded the spanish tax thresholds.... Oh dear not an easy solution, you can force the UK's hand and say you are Domiciled in Spain that may well do it but watch the Spanish don't catch on later and you find they actually own your home.

Sorry mate... not what you wanted to hear, if you do discover a way let me know I have 3 mates who would like to be tax free.
Regards, Dave

Jur

hi Lee, sorry to go off topic but are there any jobs on the rigs ? You could send me a pm with some info perhaps....

thanks. Jur

joneld

what sort of work are you looking for ??? ill help if i can

lee

joneld

cheers for that how would i apply for Domicile??????
do you no

snikpoh

Do you mean domilcile or residency? You can't apply for domicile (I don't think) as it is 'earned'. Certain factors are; place of Fathers birth, ties to the country (bank a/c's, subscriptions etc.), residency and much more.

This is quite a minefield where IHT and succession taxes are concerned.

benny172002

Lee,

If you log on to HMRC web search for section 41 ITEPA it describes how tax is charged in the north sea outside the 12 mile limit (territorial waters) however it also states that the legislation has no relevance in determining residence for uk tax purposes, so I do not know how they can argue not giving you a NT coding.

Benny

joneld

im outside the 12 mile limit so who do you thinks the best person to talk to i.e an accountant?????

joneld

becoming non domicile in the uk

benny172002

I would have a word with a good accountant HMRC are very good at telling what you are not entitled too, but never what you are. remeber though when you move to spain, it is 183 days max otherwise you become liable to spanish income tax, which is at a higher rate than the uk and never more than 90 day average in the uk.

snikpoh

I still think that you might mean resident (forgive me if I'm wrong) because domicility can't be changed easily! Have you taken a look at IR20 - this covers what's required.

http://www.hmrc.gov.uk/CNR/residencedomicile.htm

Fred James

The 12 mile limit is not entirely relevant. Most rigs are outside that limit which is why the UK Government designated most of the "continental shelf" as part of the UK for tax purposes. I think you will find that you come under this rule which is why you are taxed in the UK because you are working in the UK.

If you are working 2 weeks on and 2 weeks off then you will exceed the 90 day rule that applies to UK tax residency but you will be borderline in terms of Spanish tax residency as you would find it difficult to spend more than 183 days in Spain which is when you would become tax resident.

If you did you would be tax resident in both countries. Spain would have first call on the tax but you would be able to deduct any tax paid in the UK. The tax in Spain would be higher.

As you can see it is pretty complicated. I don't know if the Spanish have any special rules about Spanish residents working offshore but it might be worth finding out.

Snikpoh is right, domicile changes are extremely difficult and HMRC will only ever consider it when there is an actual tax situation where it could be relevant and it rarely affects income tax liability. Domicile is a UK tax concept and usually does not exist in other countries - there you are either tax resident or not. Some confusion comes from the fact that the Spanish taxman would talk about "fiscal domicile" when we would translate that as "fiscal residency".

Jur

Hi Thanks, I´ll send you a private message!

benny172002

Fred, with the utmost respect HMRC are not a system of fairness especcially when it is dealing with minority population, they will bend the rules to suite themselves, as far as working outside the 12 mile limit in the north sea it quite clearly states in the rules that this time will not be treated as time spent as being in the uk.!

Fred James

HMRC - fairness - that's an oxymoron! As you say, assuming they can't make the rules then they bend them.

They complicate it even more as they have about a dozen different residency types such as "Resident, but not ordinarily resident, domiciled" - and any variation on that theme!

It seems to me that what they are saying is that if you work in a "designated" offshore area (outside the 12m limit) you are treated as working in the UK but that it doesn't necessarily affect your residency status - but that doesn't necessarily mean that they won't tax you!

It looks like a minefield to me and I can't make much sense of it. If it was me I would carry on paying the UK tax and make sure I wasn't ((officially) in Spain for more than 183 days. It's pretty well impossible to end up paying no tax anywhere - one side or the other will clobber you.

I was not resident in the UK for 5 years but because I never was resident in any other country long enough, HMRC insisted on taxing my UK pension income until I became tax resident (and could prove it) somewhere else.