The Chartered Tax Adviser Examination
Pilot Paper
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The Application and Interaction of Taxes
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Suggested Solutions
Requirement 1
Report to Keith Day, Finance Director, Fashion Inc (cc. Jane Green, Finance Director,
Adams Ltd) regards tax considerations connected with Project PSI
Executive Summary
Our comments in this report focus on two main areas; using the costs of Project PSI in the
most effective way for the Fashion Inc. Group and the tax and cost implications of the change
in Mr Major’s role.
Regarding the Project PSI costs we would recommend that all related costs are initially borne
by Brown Ltd. Any resulting losses that occur can then be transferred to Adams Ltd under
group relief provisions allowing the groups’ UK corporation tax position to be optimized.
The proposed change in Mr Major’s role will result in a small reduction in the annual UK
income tax payable by the group under the terms of his tax equalisation.
Brown Ltd should consider carefully whether it wishes to continue with the purchase of the
company owned house. As well as the stamp duty land tax payable on the purchase, the
annual taxable benefit produced for employee occupation of the property exceeds the level of
the accommodation allowance otherwise payable to assignees to Newcastle. Over the years
this could increase the costs of tax equalization for assignees to the UK.
1 – Tax effective use of the costs of Project PSI
Cost Allocation of Project PSI
If the project costs relating to the integration of Brown Ltd into the Fashion Inc network are
borne by Adams Ltd they will be considered a disallowable expense for corporation tax
purposes as they are not related to the Adams Ltd trade and do not have a business purpose
for Adams Ltd. As a result no tax relief would be achieved by allocating these costs to Adams
Ltd.
It was suggested that Adams Ltd should continue to bear all of Brian Major’s employment
costs throughout his assignment including the period he will be working on Project PSI.
Adams Ltd and Brown Ltd are connected companies for the purpose of the transfer pricing
legislation. Adams Ltd is too large to qualify for the SME exemption from the transfer pricing
rules as it has over 250 staff and a turnover in excess of 50 million euros.
For Adams Ltd to provide Mr Majors’ services to Brown Ltd without charge would be contrary
to arm’s length principles and a transfer pricing adjustment should be made when doing the
corporation tax calculation to remedy this. Again this would have the effect of denying
corporation tax relief for these costs.
We would recommend that either Mr Majors’ secondment is revised so that he is seconded to
Brown Ltd and Fashion Inc recharges his employment costs directly to Brown Ltd, or Brian’s
overall role is assessed and an appropriate recharge is made from Adams Ltd to Brown Ltd to
reflect the proportion of his time spent working for the benefit of Brown Ltd for the remainder
of his UK assignment. This should be supported by detailed documentation and revisited
during the project to make sure it remains appropriate.
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You may also wish to consider any impact on Brian’s work visa as he may have a change in
host country sponsor.
Group Relief for UK losses within the Fashion Inc. Group
Group relief allows the transfer of losses between companies who are in a group relief group.
Adams Ltd and Brown Ltd are now in a group relief group as they are both at least 75%
controlled by Fashion Inc and are both UK entities. It does not matter for this purpose that
Fashion Inc. is not a UK entity.
The trade losses of Brown Ltd that arose before it joined the Fashion Inc group cannot be
group relieved. However they can be used in the future against the next available trade profits
of Brown Ltd as long Brown Ltd has essentially continued as the same business (with no
major change in the nature or conduct of its trade) since the takeover.
However, if new trade losses are created (or potentially increased) due to any deductible
costs of the integration project, these losses can be surrendered to Adams Ltd as they would
have arisen in a period during which Adams and Brown were part of the same loss relief
group.
The losses would be deducted from the taxable profits of Adams Ltd resulting in a
Corporation Tax saving at a rate of 20% of the loss. This would produce the same result as
the proposed cost allocation and would also accurately reflect where the costs should be
borne.
2 - Tax and cost implications of the change in Brian Majors’ role.
Mr Majors’ Tax Residency, Domicile and NIC status
Based on current expectations Mr Majors will be considered UK tax resident throughout the
period of his UK assignment.
Even allowing for the time he is expected to work outside of the UK he will have more than
183 days presence in the UK in the 15/16, 16/17 and 17/18 tax years which would
immediately cause him to be considered UK tax resident for those years.
While he will not have 183 days of presence in the UK during 18/19, the two months that he is
in the UK to complete his assignment fall at the end of a 365 day period during which he is
now expected to work in excess of 75% of his time in the UK. This full time work in the UK
would also be a trigger for him to be viewed as tax resident in the UK.
In 2015/16 Mr Major is considered an individual arriving in the UK, and meets the conditions
to split the tax year both because he is starting full time work in the UK and also because he
is starting to have a home in the UK. This means that he will be considered non-resident in
the UK for the first part of the tax year and will be considered UK resident for the second part
of the tax year. The exact date he will become UK resident will be the earlier of the day he
bought his UK home or the day he performed his first UK workdays in 2015/16.
In 2018/19 he is also likely to be able to split the tax year on the basis of starting full time work
abroad and ceasing to have a home in the UK. This time this will result in his being
considered UK resident for the first part of the tax year and non-resident for the second part of
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the tax year. We will need to review the exact date he becomes non-resident at the time
following a review of his working pattern over that tax year.
Given Mr Major’s family’s long standing connections in the US it is also clear that he is not
domiciled in the UK for UK tax purposes unless he has long terms plans to remain and set up
life in the UK.
The UK and the USA have a social security agreement in place. As Mr Major’s remains
employed by Fashion Inc. and has been seconded to the UK he is eligible for a certificate of
coverage to keep him fully within the US social security system. As a result no UK NIC of any
type is payable on his employment income.
Impact of Mr Major’s tax status on the taxation of his employment income
As a non UK domicile who has not been previously tax resident in the UK Brian Majors is
eligible to make a claim for what is commonly known as overseas workday relief.
This means that the proportion of his taxable general earnings (net salary, assignment related
allowances etc.) which is both earned and retained outside the UK, will not be taxed in the
UK.
The company policy states that assignment allowances will be paid in host currency into the
host country bank account which will reduce the maximum relief available.
Additionally, the fact that Mr Major is paid partly in the UK and partly in the US will reduce the
overseas workday’s relief available. The UK has rules about identifying the type of income
within a payment. Where an individual is paid via a split payroll each payment is considered to
be made up of income earned in the UK and income earned outside of the UK in equal
proportions. As a result, a portion of the income relating to non-UK workdays is considered to
be paid/received in the UK and is therefore not available for relief.
As Mr Majors is tax equalised while on assignment in the UK any tax savings from overseas
workdays relief will be for the benefit of the company.
The relief will apply for the first three tax years of his UK assignment in the UK only. It will not
apply to the portion of the 18/19 tax year that Mr Majors is expected to be tax resident in the
UK.
In order to claim this relief Mr Majors must file his tax return as a “remittance basis tax payer”,
something he is eligible to do due to his status as a non UK domiciled individual.
Filing a UK income tax return as a remittance basis taxpayer often has the negative
consequence that the individual concerned loses their eligibility to the UK personal allowance
and annual capital gains tax exemption (currently £11,000 and £11,100 respectively).
However, where an individual’s income exceeds £100,000 in a tax year their entitlement to a
personal allowance is reduced by £1 for every £2 of additional income over the £100,000
threshold. Once an individual’s income reaches £122,000 their personal allowance
entitlement will have been reduced to nil. This is irrespective of any remittance basis claim.
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When preparing an individual’s tax return we will compare whether the reduction in UK
taxable income gained through use of the remittance basis outweighs the impact of the loss of
the UK allowances.
Based on our calculations in Appendix 3 Mr Major’s income levels, once the employer paid
taxes are included, are likely to exceed £100,000 in any full year of UK tax residence. We
expect to make the remittance basis claim in any returns we file including the 15/16 return
currently being prepared.
The amount of the relief will depend on the number of workdays spent outside of the UK
during the tax year by Mr Majors and whether or not Mr Majors has brought any of the funds
delivered overseas into the UK. We have assumed for the purposes of our example
calculations that Mr Majors will not bring any additional funds into the UK from the part of his
income delivered in the US to the UK
Additionally I would note that while the exchange rate in your policy may be used for
determining the amount of sterling compensation to be delivered in the UK, when we are
determining how to reflect the overseas portion of Mr Major’s compensation in any tax filings
we should be using the foreign exchange rate in force at the date of payment.
As part of our tax services when Mr Major’s arrived in the UK we identified the eligibility for
this tax relief and sent an application to HMRC to have the overseas workday relief reflected
in Mr Major’s payroll arrangements under what is known as a s. 690 ITEPA 2003 direction.
This means that at present UK PAYE is being operated on the total worldwide cash earnings
paid to Mr Majors less a 15% deduction for the US delivered income relating to the proportion
of his duties that were expected to be performed outside of the UK. The direction can be
applied for to cover all three tax years that this relief is available for.
We should not forget that as Mr Major’s is a US citizen he will continue to be liable to US
taxes on his worldwide income throughout his assignment to the UK. As a result the tax
savings achieved by the overseas workday relief claim will not be the full amount of the UK
taxes saved as US federal, and occasionally state taxes, could remain due on this portion of
his employment income. We would recommend seeking additional advice from your US tax
advisers.
Payroll matters for Mr Majors as a result of Project PSI
Mr Majors is currently included on the Adams Ltd payroll and we understand you wish to
continue this arrangement. Whether this is appropriate or not will depend on your decision as
to whether Mr Major’s secondment agreement should continue to be between Adams Ltd and
Fashion Inc or whether it should be restructured as a secondment to Brown Ltd.
If you choose to amend the terms of Mr Major’s secondment we would recommend that Mr
Major’s payroll arrangements also be amended accordingly.
In this case you would need to complete the payroll leaver information to remove Mr Majors
from the Adams Ltd payroll and then complete the starter information to add him to the Brown
Ltd payroll. We would be happy to assist with this.
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Additionally we would recommend you consult with your US tax advisors to check that the
certificate of coverage issued for him at the start of his assignment is still valid and if not, you
should reapply for a new certificate of coverage reflecting the revised arrangements.
We must ensure that the overseas workday relief under the new arrangements is reflected in
the payroll as accurately as possible. 95% of Mr Majors’ employment income will now be
expected to be chargeable to UK taxation as opposed to 85% in his initial UK and European
role. Accordingly, we would need to either apply for a new or revised s690 direction as
appropriate.
It should be noted that accounting for UK PAYE for a tax equalized employee whilst also
utilising a split payroll arrangement can be administratively burdensome. It is also an
increased compliance risk for the company when considering the UK’s strict rules on payroll
reporting timing under the “Real Time Information” rules which require payments to an
employee to be reported to HM Revenue & Customs on or before the date of payment.
We would recommend considering making an application to HM Revenue & Customs to set
up a modified payroll arrangement for whichever company will be hosting Mr Majors. This
special arrangement is only available for tax equalised employees and in essence allows the
UK PAYE, paid over on a monthly basis, to be calculated on a best estimate basis with a
reconciliation when accurate figures are known at the end of the tax year. The benefits for you
of using this type of arrangement are multiple. It will ring fence this more complicated type of
employee from the main payroll reducing the possibility of larger payroll penalties if errors are
made. It allows a little more flexibility in the timing of reporting amounts paid outside of the
UK, allowing for exchange rate fluctuation and reflecting the deductions for overseas
workday’s relief. We can discuss in more detail if you are interested in pursuing this.
Deductibility of accommodation, travel and subsistence for Mr Majors while on
assignment to the UK
The initial expectation was that all 3 years of Mr Major’s assignment would be substantially at
the same workplace.
Under this expectation the Adams Ltd workplace would be considered a permanent
workplace for tax purposes. This is because he would be performing duties here to a
significant extent (defined at 40% or more) over a period of more than 24 months.
As a result, deductions from income in respect of travel and subsistence for attending this
workplace would not have been possible.
If, as a result of Project PSI, Mr Majors spends the period from the start of his assignment to
the end of December 2016 (19 months) with Adams Ltd in London and then the period from 1
January 2017 through to the end of his assignment in May 2018 (17 months) both of these
workplaces are able to be considered temporary workplaces. This is because the attendance
at each of these workplaces will be for less than 24 months and Mr Majors expects to return
to his permanent workplace in the US at the end of the assignment.
As this tax treatment is intention based we will only be able to treat Adams Ltd as a temporary
workplace for Mr Majors from the date it is confirmed that he will be moving to Newcastle to
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work on Project PSI and his attendance at the London workplace is no longer expected to
exceed 24 months.
For periods where he is considered to be attending a temporary workplace when we prepare
Mr Major’s tax return we will be able to claim a deduction against his employment income for
reasonable accommodation, subsistence and commuting expenses. This can significantly
reduce his UK tax bill. When we prepare Mr Major’s tax refund we can ask for any UK tax
refund to be paid directly into the relevant company bank account in accordance with the tax
equalisation agreement.
We would recommend that you ask Mr Majors to keep receipts for all his travel, food and
accommodation expenses for the remainder of his time in the UK to facilitate this claim.
Please note that we will not be able to deduct any part of the subsistence expenses that
relates to Mr Major’s spouse or children.
For the remainder of his time in London we will not be able to claim any deduction against Mr
Major’s taxable income in respect of his London property as he has purchased this as a
capital asset. The housing allowance he receives is therefore likely to remain taxable in full
but a claim for travel and subsistence should still be available.
For the period he is in Newcastle and is being provided with housing by the company the
temporary workplace deduction will remove up to 100% of the taxable benefit from the
provision of his accommodation. As the deduction is only available for expenses relating to Mr
Majors and not any accompanying family members, we should consider what proportion of
the benefit we believe relates to Mr Majors alone. There are no set rules for determining this
amount and if the same accommodation would be provided to an employee undertaking the
same role but who was unaccompanied we may wish to take the position that we can deduct
100%. Equally, it is not unusual to restrict the claim to 70% or even 50% of the total value
because he is accompanied. We can discuss this in more detail to obtain the companies view
on the housing provision.
Again, at this point, I would note that as Mr Majors is a US citizen his worldwide income
remains chargeable to US taxes. We would recommend consulting with your US tax
consultants as to whether this would have any impact on his treatment for US tax purposes
Implications of suggested purchase of company owned accommodation by Brown Ltd
– Freehold
At first glance the proposed acquisition of a freehold costing £1.2million in Newcastle would
appear to fall within the punitive UK tax rules for companies which hold high value residential
properties leading to higher Stamp Duty Land Tax (SDLT) and an annual tax on the property
(ATED). High value is currently defined as a property costing £500,000 or more.
However, as the property is being purchased in order to provide accommodation to an
employee you should fall within an exception from these rules. This will be the case as long
as Mr Major’s does not have a 10% or greater holding in Brown Ltd. We do not believe this
will be the case but please contact us for further advice if he does have such a holding.
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On the purchase of the freehold Brown Ltd will be liable to pay SDLT at graduated rates up to
10%. This will come to £63,750. (See appendix 1)
The SDLT cannot be deducted from Brown Ltd’s trading profits. It will be added to the other
capital costs of the property and be deducted from the sale proceeds when you come to sell
the property.
The annual taxable accommodation benefit that would be chargeable on an employee
occupying this property will be just over £33,750 (See appendix 2).
In addition to the amount I have calculated we will need to add the annual value of the
property which is normally reached by finding out the gross rateable value of the property.
If it is planned that this will be used by long term assignees of a similar income level to Mr
Majors the additional tax due on a grossed up basis is likely to be between £22,500 ( for a
higher rate taxpayer) and £27,614 (for an additional rate taxpayer).
If Brown Ltd intend to furnish the house and pay any of the running costs on behalf of
employees occupying the house these too will produce additional taxable benefits increasing
the grossed up tax costs. All of these benefits should be reported on P11D.
I have not calculated any Class 1A NIC on this figure as I have assumed that any assignees
occupying the property will also come from the US and be covered by a certificate of
coverage keeping them within the US social security system and exempting them from UK
NIC. However the benefit should still be reported via form P11D(b) with an adjustment to the
amount of Class 1A NIC due overall to ensure that nothing is paid in relation to the property.
This income tax paid by the company would be deductible from the company’s trading profits
in the same way as other employment costs. Assuming a corporation tax rate of 20% this
would produce a corporation tax reduction of £4,500.
However, as discussed above, as we would consider that Mr Major’s is eligible for a
temporary workplace relief deduction for accommodation which would remove up to 100% of
this benefit from his taxable employment income.
Brian’s London home - If sold on move to Newcastle
Brian has lived in the London property house since purchase therefore would be eligible to
claim principal private residence relief (PRR) on the property. If he does this the whole gain
would be exempt from CGT in the UK and there would be no UK tax to pay.
Throughout this period he has also retained ownership of a home in the US. PPR is only
available for an individual’s only or main home. An individual has the right to nominate
whichever property they own as their main residence as long as they do actually reside in that
property.
Brian should write to HMRC to nominate the London property as his main residence. This
election should be made within 2 years of obtaining a second property that could be
considered as a private residence.
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Again, I would caution that as Brian is a US citizen, US taxes should also be taken into
consideration. Per the tax equalisation policy Brian himself should be responsible for the
taxes on this gain if there are any in the US. If the company chooses to make a payment to
Brian to cover any US taxes due this would be seen as additional employment income and
subject to income taxes in the UK and US, plus social security in the US.
Brian’s London home - If retained
If Brian sells the property in 5 years’ time he is likely to be a non-resident for UK tax at this
point.
As a non-resident he will still be liable to UK CGT on any gain from the sale of UK residential
property.
Once he sells the property he should file a return notifying HMRC of the disposal and pay any
CGT due within 30 days of the conveyance.
A proportion of any gain calculated should be able to be exempted under PRR as described
above to reflect the period that Brian lived in the property. To secure this the election
described above should be made.
If Mr Majors intends to retain the property we would recommend that he makes a UK will
dealing with the disposition of this property to run concurrently with any US will dealing with
the remainder of his assets.
We recommend that Mr Majors take legal advice from a practitioner well versed in both UK
and US law.
Estimated annual UK income tax cost impact of change to Mr Major’s assignment by
Project PSI
Per my calculations the UK income tax bill for the Fashion Inc. group will reduce slightly as a
result of the proposed change in Brian Major’s role.
Calculation A (See Appendix 3) shows the UK income tax due to be paid for a 12 month
period where Mr Majors continues in his current role. This creates an annual income tax bill of
approximately £66,348 for the company to meet.
Calculation B (See Appendix 3) shows the UK income tax due to be paid for a 12 month
period where Mr Majors works on Project PSI as proposed. This creates an annual income
tax bill of £40,431 for the company to meet.
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Appendix 1: SDLT on purchase of Newcastle freehold property
Property
value
Start of
band
0
125,001
250,001
925,001
1,500,001
£1,200,000
End of
band
125,000
250,000
925,000
1,500,000
upwards
Amount
Payable
£0
£2,500
£33,750
£27,500
£0
Rate
0%
2%
5%
10%
12%
TOTAL
£63,750
Appendix 2: Annual tax on company owned accommodation
Annual value of property plus
Expensive property charge
Cost of property
Less 75,000
Multiplied by ORI (3%)
GRV TBC
1,200,000
1,125,000
33,750
Page 10 of 16
Appendix 3: Comparative income tax calculations
Net Salary after home country hypo tax
(USD 150,000 *.666) (See note 1)
Home Leave flights for elder child (USD20,000
*.666) (See note 2)
Net COLA (£1,000/£500 x12)
Less TWR deduction for subsistence expenses (See
note 3)
Net housing allowance (£2500 x12)
Calculation A:
Current Role
(£)
66,660
Calculation B:
Proposed change
(£)
66,660
13,320
13,320
12,000
6,000
-6,000
30,000
0
Taxable benefit for company housing
0
33,750
Less TWR deduction for accommodation expenses
(See note 4)
Total income pre OSWD relief
0
-33,750
121,980
-9,999
79,980
-3,333
111,981
Nil
76,647
Nil
111,981
76,647
0 to 32,000 @ 20%
32,000 to 150,000 @ 40%
Above 150,000
Total tax pre gross up
6,400
31,992
0
38,392
6,400
17,859
0
24,259
Higher rate gross up tax @ 40/60 (For calculation A:
Higher rate gross up tax @ 40/60 on 60% of
remaining HRB)
Calculation A only: Higher rate gross up tax @ 45/55
of pre gross up tax less 60% of remaining HRB
Total UK tax due
15,208
16,173
Less OSWD Relief Proportion (30% /10%) * the 50%
of salary paid overseas
Total employment income
Less Personal Allowance (Remittance basis
taxpayer)
Taxable Income
UK income tax pre gross up
12,748
66,348
40,431
Taxable employment income
111,981
71,982
UK taxes
66,348
37,321
Total taxable income including grossed up tax
178,329
109,303
0 to 32,000 @ 20%
32,000 to 150,000 @ 40%
Above 150,000 @45%
6,400
47,200
12,748
66,348
6,400
34,031
0
40,431
Income tax check
Page 11 of 16
Notes:
1. For the purposes of this illustration we have used the exchange rate provided in the
assignment policy
2. Mr Major’s elder child is 21. As a result any flights provided by the company for this child
will be included in his UK taxable income. The two return flights provided for the younger
child will remain tax free until this child reaches the age of 18.
3. In calculation B we have assumed that Mr Major’s receipted subsistence expenses will
allow for the full COLA to be claimed under TWR.
4. In calculation B we have assumed that HMRC will allow 100% of the accommodation
costs to be claimed under TWR.
Requirement 2
MEMO:
To: Frank Evans
From: Tax Adviser
Re: Engagement letter and billing issues connected with Fashion Inc. advice
We need to review our engagement letter for the work we do for Adams Ltd and consider
whether it is appropriate for this work as the scope of services appears to have changed
significantly from our normal services.
We need to consider whether our engagement letter it is with the appropriate entity. If it is
currently with Adams Ltd we should consider revising this to Fashion Inc. and specifying that
all member companies within the group are covered.
If this approach is take we should;
 check that Fashion Inc. has the authority to bind all the group companies,
 include a list of all group companies in the EL
 include a requirement for Fashion Inc. to inform us of any changes to the group
structure.
We should also consider whether our advice in relation to Brian’s London property will require
a separate letter of engagement with him in addition to the one we should already have in
place for his tax return preparation as part of our existing role in the context of his assignment
to Adams Ltd.
We need to consider the VAT position on our fee note. If we consider that for this report our
services are being provided to Fashion Inc. this is a business to business supply of services
where the place of supply is outside of the EU. As a result the transaction would be outside
the scope of UK VAT. If we consider that our services are being provided to Adams Ltd. a UK
entity we would need to charge UK standard rated VAT as normal.
To help gain clarity on this, rather than deliver the report to Jane Green and Keith Day
concurrently, I recommend we work with the client to agree who this work is for and we
deliver our output to one recipient only. If they then wish to share the report internally they can
do so.
Page 12 of 16
General Topic
Marks
Higher skills and presentational marks
22
Cost Allocation of Project PSI
Projects costs disallowable for Adams Ltd
1
Adams Ltd and Brown Ltd connected for purposes of transfer pricing (no SME
exemption)
2
Transfer pricing adjustment for Brian Majors’ employment costs
1
Restructure arrangements accordingly. (Consider immigration implications)
2
6
Group Relief for UK losses within the Fashion Inc. Group
1
Explanation of group relief
1
Group relief group
1
Pre-acquisition trade losses
1
New trade losses
1
Impact of transferring losses
5
Mr Majors’ Tax Residency, Domicile and NIC status
2
UK tax residency in 15/16
1
UK tax residency in 16/17 and 17/18
2
UK tax residency in 18/19
1
Domicile position
1
Social security position
7
Impact of Mr Major’s tax status on the taxation of his employment
income
1
Page 13 of 16
Eligibility for overseas workday (OSWD) relief
1
Assignment allowances paid in host country
1
Impact of split payroll
1
Tax savings are for the company
1
Tax years where OSWD relief is available
Claiming the remittance basis
1
1
Personal allowance abatement for high income
Foreign exchange rate to be used for UK tax calculations
S690 direction
1
1
1
US tax payer issues
10
Payroll matters for Mr Majors as a result of Project PSI
Secondment arrangements and payroll should match
1
Practical aspects of moving payroll
1
Revised s690 direction required
1
Discussion of modified payroll
1
4
Deductibility of accommodation, travel and subsistence for Mr Majors
while on assignment to the UK
Original intention. Adams Ltd = permanent workplace
Impact of project PSI = both temporary workplaces from the date intention has
changed.
Temporary workplace relief deduction
1
2
1
Refund for the company
1
Spouse and children
1
TWR deductibility of London and Newcastle accommodation
2
8
Page 14 of 16
Implications of suggested purchase of company owned accommodation
by Brown Ltd – Freehold
2
ATED – eligible for exemption
3
SDLT (explanation and calculation)
2
Calculation of taxable benefit
1
Income tax due on benefit
1
Furnishings
2
Class 1 A NIC and P11D(b) reporting
Deductibility of income tax for corporation tax purposes
1
12
Brian’s London home - If sold on move to Newcastle
PPR availability and impact
1
Home in the US
2
Taxability of employer payment of any US taxes potentially due on sale
1
4
Brian’s London home - If retained
3
Non Residents CGT
2
PPR & Lettings relief
1
UK will to run concurrently with US will
6
Appendix 3: Comparative income tax calculations
2
Calculation of total income pre OSWD relief
OSWD relief deduction of 50% x salary paid overseas
No personal allowances for remittance basis user
1
1
1
Calculation of income tax pre gross up
2
Tax gross up calculation
Page 15 of 16
Application of TWR
1
Treatment of home leave flights
1
9
Requirement 2
Review Adams Ltd engagement letter for scope of services
1
Consider revising engagement letter from Adams Ltd to Fashion Inc. as head
of group taking all appropriate cautions
3
VAT position on fee note
2
7
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