Case studies

Please see below for case studies.

Issue: PAYE Problems

A French employee of a multinational organisation overpaid PAYE tax as a result of a mix-up with the company’s payroll arrangements.  HMRC opened a tax enquiry into the client’s repayment claim and challenged his tax residence status. 

Result:

BDO established the facts in relation to the client’s whereabouts during the year in question, and prepared a report which clearly set out the client’s case and supported the report with evidence.  The report satisfied the HMRC that the individual was non resident for UK tax purposes.  We also demonstrated that expenses were incurred wholly, exclusively and necessarily for business purposes and he was therefore entitled to a tax deduction, preventing a tax charge of  £120,000. 

HMRC was satisfied to the extent they closed the tax enquiry and repaid in excess of £500,000.  HMRC also agreed that the client no longer had to send in UK tax returns unless his circumstances changed.

Issue: Divorce and domicile

In the midst of a divorce case, it came to light that one party had never previously paid any UK tax despite being tax resident.  BDO helped them to make a voluntary disclosure to HMRC.

The individual had significant foreign income and gains and a large proportion of it was retained in offshore banks.  The amount of UK tax due depended on the individual’s domicile status and how much untaxed income he had brought into the UK.

Result:

Domicile refers to your permanent home and is often linked to your father’s place of birth.  The individual had a complicated set of circumstances, including the client being born in the UK and then adopted.  BDO presented the facts clearly and concisely to HMRC. 

After some hard negotiation BDO persuaded HMRC that the individual was not domiciled in the UK, and saved the client over £100,000.

The agreed non-domiciled status was also useful in structuring the divorce settlement in a tax efficient manner.