We have many client’s who leave the UK to work in the Oil and Gas Industry.
A common scenario is for an employee to spend their working time in a low or zero tax regime, but then to spend the rest of the time when they are not working back here in the UK.
Due to the nature of these contracts the time spent in the UK can be quite significant and it can be quite easy for an the expat employee to become dual resident in the UK and the country they work in.
This can cause problems, sometimes resulting in the employees offshore employment income being subject to UK tax removing the benefit of working in a low or zero tax country.
We assist clients by reviewing their tax residency status, with reference to the Statutory Residence Test (“SRT”).
For some clients it will be imperative they maintain non-residence in order to rightfully avoid paying UK tax on their offshore employment earnings.
We can provide robust advice on the steps to take to ensure they remain non-resident with reference to the SRT.
This is especially important in cases where the client is working in a “non-treaty” country i.e. one which does not have a Double Tax Agreement (“DTA”) with the UK.
Dual Residents and Double Tax Agreements
For some clients it might be impossible to avoid becoming dual resident.
In these cases we look to see if the client can protect his tax position by relying on a DTA between the UK and the country in which they are employed.
The purpose of this exercise is to identify which country the taxpayer is tax treaty resident in and has the taxing right over the employment income.
Clients are often surprised to hear that the UK has a DTA in place, especially since they are working in a low tax country.
However, the UK has agreements in place with Kuwait, Qatar, Oman, Angola and Nigeria to name just a few Oil and Gas producing countries that they might be based.
We have successfully applied the Articles of these DTA’s to ensure that our clients are only taxed in the country they perform their employment duties.
Ensuring the DTA is applied correctly can save a significant amount of tax for the expat employee working in the Oil and Gas Industry.
If you would like advice on your tax position please contact us.