ACCA ATX ^UK Syllabus A1. Income tax - Residence and Domicile for Income Tax - Past Papers ^{1 / 3}

A non-UK domiciled employee requires advice in relation to the remittance basis.

Yara – non-UK domiciled employee:
– Is currently resident in the UK but domiciled in the country of Setubia.
– Became UK resident when she was employed by Methley Ltd on 1 April 2009.
– Receives an annual salary from Methley Ltd of £80,000 and has no other UK source of income.
– Receives rental income from an unfurnished residential property in Setubia.

Yara – overseas rental income:
– The gross annual rental income from the overseas property is £24,000.
– Yara only remits £15,000 of this income to the UK each year.
– Yara has previously claimed the remittance basis each tax year.

Required:
(c) Advise Yara whether or not it would be beneficial for her to claim the remittance basis in the tax year 2015/16, and calculate the increase, if any, in her income tax liability for the tax year 2015/16 compared to that of previous years, assuming that she chooses the most tax beneficial course of action.

Note: You are not required to consider the potential availability of double taxation relief (DTR). (7 marks)

(b) Buraco’s links with the country of Canasta:
– Buraco is domiciled in Canasta.
– Buraco owns a home in the country of Canasta.
– Buraco’s only income is in respect of investment properties in Canasta.
– Buraco frequently buys and sells properties in Canasta.

Buraco’s links with the UK:
– Buraco’s ex-wife and their 12-year-old daughter moved to the UK on 1 May 2013.
– Buraco first visited the UK in the tax year 2013/14 but was not UK resident in that year.
– Buraco did not own a house in the UK until he purchased one on 6 April 2014.
– Buraco expects to live in the UK house for between 100 and 150 days in the tax year 2014/15.

Required:
(ii) On the assumption that Buraco is resident in the UK in the tax year 2014/15, state the tax implications for him of claiming the remittance basis for that year and explain whether or not there would be a remittance basis charge. (3 marks)

The remittance basis of taxation:

– Advice is to be provided to three non-UK domiciled individuals.
– Each of the three individuals is more than 18 years old.

Details of the three individuals:

Required:
(i) In respect of each of the three individuals for the tax year 2012/13:
(1) explain whether or not the remittance basis is available;

The remittance basis of taxation:

– Advice is to be provided to three non-UK domiciled individuals.
– Each of the three individuals is more than 18 years old.

Details of the three individuals:

Required:
(ii) Give TWO examples of actions that would be regarded as remittances other than simply bringing cash into the UK. (2 marks)