client worked in Middle East for last 10 yrs, born in UK
now returned to UK to work will be claiming TCS does he need to put down what he has earned in Middle East in last tax year and work out what this is in £?
In same vein we have number of Polish people claiming tax credits do they need to put down what they earned in Poland in last tax year and if so is this verified or do they need to provide proof?

Thanks

I am in the midst of a debate with the technical people at HMRC tax credits as to this situation. Is the answer "nil" or is it something else?

If it is something else you have a whole raft of follow up questions as to how you convert such income and expenses onto a UK basis.

But the first question is where is the law which enables HMRC to bring into account the income of someone who is not resident and not ordinarily resident?

The current HMRC position is that they have the right to bring it into account; but have not quoted chapter and verse.

I will come back to the forum when I have a definitive answer, unless someone else already has one.

Thanks very much for getting back to me. I would be very interested in the outcome.

My understanding of this is that it is only income earned within the UK, certainly any foreign EU national, especially those from the Assession States should in their first year in the UK have a previous income of Nil and be awarded the maximum entitlemnt to tax credits.

Another inportant thing to remember in relation to this is that the workers from abroad may also be entitled to the Child Tax element. If they have children who have remained in Poland, the worker in the UK can still claim Child Benefit and therefore CTC for them under the Chb regulation that the children are "receiving education abroad".

Apparently foreign Income can be taken into account see Reg 12(1)TC (DCI)Regs - there are disregards check the regs and CPAG for a complete list

Thanks but I thought declaring foreign income is different to foreign earnings and I was only looking at foreign income and under Reg 4 (1) TC (DCI) Regs - "it states receipt of any payment .... in any part of the world"
so would that not mean earnings from any other country? but proving could be difficult

This is income from foreign possessions; things like property and certain types of loan instruments and does not refer to employment income.

I'm not sure, but I don't think that's right

I'm just looking at Tax Credits (Definition and Calculation of income) Regulations 2002.

2.124 (3) says that:

The taxable forms of income are not identical to those used for income tax. They are similar, but include some additional items, (next bit not really relevant)

then section (4) goes on to say that: Claimants are taxed on world wide income. Tax Credits may only be claimed by those ordinarily resident in the U.K but they are subject to the obligation to declare their full incomes, regardless of any reliefs by way of double taxation or exemption they may receive under the Income Tax Acts.

Then in 2.182 it goes on to say that: this regulation provides for all foreign income charged to income tax to be relevant for tax credits save for specific exemptions.

See also page 1331 of CPAG Guide:Although earnings from abroad are taken into account in the same way as UK earnings, other foreign income is taken into account subject to the following rules.

However, I have to admit I see very few clients so I am interested in what you say as it appears that HMRC are assessing your clients on a zero income.

As far as Accesion Country Nationals go they should certainly benefit from Tax Credits being assessed initially on last years taxable income, simply because their wages would be so much lower. On the other hand I'm surprised that they get the maximum.