Can you recommend a tax consultant for an American ex-pat in the UK?
June 19, 2012 3:14 PM   Subscribe

I'm seeking recommendations for tax consultants in the UK, or in the US, or maybe both, to figure out where I need to pay taxes.

Background: I just relocated to the UK on a 2 year visa as the spouse of a visiting armed forces serviceperson. That visa gives me the right to work in the UK, but I am still working for my US company, based in Boston, on a telecommute basis as a part-time employee, being paid in US dollars directly deposited into my US bank account. We called the HMRC office and they after hemming and hawing a bit they said they think I should be paying taxes here, not in the US, since the work is being performed here, but a private tax attorney we spoke with briefly said I may still have some liability for state taxes in Massachusetts since that's where the company is based. The CFO of my company mostly wants to avoid running afoul of any laws so he wants to make sure I get as accurate and confident an answer as possible before my company changes any witholding.

I need to figure out where my tax liability is and how I should either withhold or make periodic estimated payments. But that's all I need to do. My partner and I can do our own returns and everything, and I know I have to file in both countries regardless. We got a quote from a tax consultancy here in the UK that works with a US firm and it was a bit outrageous (twice as much as the immigration lawyers were charging us to figure out our visa situation!) so we're looking for alternatives.

So. Can you recommend a firm to work with who has experience helping out ex-pats to tell me which government I should be giving my money to? I'm living in Plymouth, if you know anyone in the Devon/Cornwall area, but if they're willing to do most of their communication with me by phone or email then I don't care where they are. Like I said, I'm not interested in having them prepare returns for me, I just want them to do the research and be able to tell me where all the laws say my liability is.
posted by olinerd to Work & Money (2 answers total) 1 user marked this as a favorite
Check your memail.
posted by knile at 3:27 PM on June 19, 2012

I can't recommend someone specifically, but let me speak to my experience with tax issues as an American expat in Canada. Hopefully it'll be useful.

First, with regard to sourcing of income, the IRS has outlines rules for sourcing of income in Publication 514. For employment income, they use the country where the work was physically performed. If the work was performed in the UK, they'll let you take a credit for the taxes paid on that income to HM Revenue & Customs, limited to the amount of tax the IRS would have charged on that income.

If you have any US-source income subject to tax in the UK, then it's likely the same situation, but reversed.

Where it gets tricky is that there are special rules for elimination of double taxation of US citizens in the US's tax treaties with other countries. For example, there are special rules for treating a portion of US-source interest as Canadian-source income when paid to a US citizen residing in Canada.

The IRS website has all of the US's tax treaties, along with technical explanations. They're a bit of a slog to read through, but you should be able to make it through without any specialized knowledge. Note that each treaty has a saving clause specifying which parts don't apply to US citizens living abroad, and that this will likely cover most of the treaty.

Second, I've worked with a tax consultancy in Canada, and from my experience, I'd suggest taking everything you hear with a grain of salt. I've gotten some egregiously bad advice. Cross-border tax issues are incredibly complicated, especially as a US citizen, and a lot of self-proclaimed experts will give you bad information. If you want good advice, it'll be expensive.

Last, be especially careful with reporting any foreign assets to the US. You may need to send an FBAR to the Department of the Treasury each year, an 8938 to the IRS, and a 3520-A for any foreign accounts the IRS considers to be trusts (likely including retirement accounts). The penalties for failing to file these properly and on time can be exorbitant, and they may be due on different dates, separately from your 1040.

This is all just the tip of the iceberg -- feel free to send me a MeMail and I'd be glad to share more.
posted by neal at 4:40 PM on June 19, 2012

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