The Tax Compass Podcast

HMRC has 12 months from the date you file to open an enquiry into your tax return. These enquiries are rare. LSR Partners have submitted thousands of returns and have seen one opened on their own work.But if one does land, the ground shifts underneath you. The burden of proof moves. It is no longer for HMRC to prove you wrong. It is for you to prove you are right.In part two of this miniseries, Simon Roue and Laura Sant explain what a Section 9A enquiry actually involves, how it differs from a nudge letter, and what evidence stands up when HMRC starts asking questions.In this episode:Why Section 9A enquiries are opened, and the 12 month window that appliesHow these differ from nudge letters, which are usually about something you forgot to mentionThe routine adjustments HMRC now make automatically, without opening an enquiry at allWhy responding promptly matters, and how penalties can be charged before the substance is even consideredResidency enquiries, and why a contract stating 40 hours a week proves far less than you would thinkThe case involving phone location data, colleagues' affidavits and a 4pm drink at the office barWhy working from home makes proving your location considerably harderTechnical enquiries, including a dispute that came down to a single word in a double tax treatyWhy an amendment to your tax calculation is the best outcome available, and what it says about reasonable careThe records worth keeping now: real time hours, timesheets and travel documentsNot every enquiry is a nightmare. One recent case was resolved with a couple of phone calls. But the difference between a short conversation and an eighteen month ordeal usually comes down to the quality of your records.Part one of this miniseries covers HMRC nudge letters.If an enquiry letter has arrived, or you want your records in order before one ever does, book a call.Book a call with us at lsrpartners.comSubscribe for more tax guidance for expats and globally mobile individuals.Brought to you by LSR Partners – helping you pay the right tax in the right place at the right time.📲 Book a call with us to talk about your situation: https://lsrpartners.com🎧 Catch up on all past episodes: https://lsrpartners.com/podcast-videos

A brown envelope from HMRC. A letter saying they have information about offshore income or gains you may not have disclosed. No detail about what that information is. If that has happened to you, or you are worried it might, this episode is here to take the heat out of it.Simon Roue and Laura Sant explain why nudge letters get issued, how international information sharing between tax authorities works, and why the whole thing is an administrative process governed by legislation rather than an accusation of wrongdoing.In this episode:Why HMRC sends nudge letters, and why offshore income features so heavilyThe classic misconception: paying tax abroad does not mean nothing is due in the UKWhy UK tax residents are taxable on worldwide income and gainsCalling HMRC to find out what information they holdHow disclosures work for historic years, using the rules and rates that applied at the timeThe four year window for reclaiming overpaid tax, and how missing it can leave you doubly taxedCountry categories, penalties, interest and the offer processReal cases, including a £6.40 disagreement over interest on a liability in the thousandsThis is part one of a two part miniseries. Part two covers Section 9A enquiries.If a nudge letter has landed on your doormat, you do not have to work it out alone. Ready to talk through your own situation?Book a call with us at lsrpartners.comSubscribe for more tax guidance for expats and globally mobile individuals.Brought to you by LSR Partners – helping you pay the right tax in the right place at the right time.📲 Book a call with us to talk about your situation: https://lsrpartners.com🎧 Catch up on all past episodes: https://lsrpartners.com/podcast-videos

If you are thinking about leaving the UK and moving to Italy, the tax opportunity can be substantial. But the complexity is just as significant. Get the planning wrong, and you could find yourself liable to tax in both countries at the same time.In Episode 23 of the Tax Compass Podcast, Simon Roue is joined by Fabrizio Battaglia, partner at Studio Tributario Associato - Battaglia Cesari Zangrillo in Rome, for a detailed conversation about what Italy actually offers internationally mobile individuals, what the residency rules genuinely require, and why the advice always has to come before the move.What they cover:Italy has become one of the most attractive destinations for high-net-worth individuals and entrepreneurs leaving the UK. That sits within a competitive landscape that also includes Portugal, Cyprus and the Middle East, and the Italian government is aware it needs to keep its offer compelling.There are three main personal tax regimes available in Italy today. The flat tax of €300,000 applies to all overseas income, with a restriction on the sale of qualifying shareholdings in the first five years. The 7% pensioner regime is available to those relocating to southern Italian municipalities with fewer than 20,000 inhabitants, and covers pensions, dividends and capital gains at a single flat rate. The expatriate regime for employees and self-employed workers provides an exemption of up to 60% of income, but is capped at €600,000, runs for five years only, and has had no renewal option since 2024.Italian tax residency rules changed at the start of 2024. The primary driver is now domicile, defined as your centre of personal interest rather than your economic centre. Physical presence of at least 183 days and habitual abode are also relevant factors, and registration with your local municipality, while useful, is no longer a binding requirement.The double tax treaty between Italy and the UK adds a further layer that Italian domestic rules alone do not resolve. The treaty refers to both economic and family centres when determining domicile, whereas Italian domestic law focuses on personal and family ties only. That gap is where mistakes happen, and it is one of the most common reasons people end up with unexpected obligations in both countries.Visa type and tax regime are closely linked in Italy in a way that has no real equivalent in the UK system. The digital nomad visa, the investor visa and elective residency each carry different commitments and different consequences, and choosing the wrong route can have real financial implications down the line.For entrepreneurs working remotely in Italy, permanent establishment risk is a serious consideration. Under updated OECD rules, a home office used for operational business activity rather than simply auxiliary or advertising purposes can be sufficient grounds for the Italian tax authority to assess a permanent establishment, even where the employer is based overseas.A well-structured approach to an Italian move covers three phases: an assessment phase before any action is taken, an implementation phase where the appropriate regime is applied for and, in the case of the flat tax, a ruling is filed with the Italian tax authority, and an ongoing compliance phase covering annual tax management and any issues that arise.The consistent message throughout is the same one LSR Partners gives to every client considering a cross-border move: plan before you act. Once the wrong steps have been taken, you cannot always undo them.About our guest:Fabrizio Battaglia is a partner at Studio Tributario Associato - Battaglia Cesari Zangrillo, a specialist tax firm based in Rome with deep expertise in cross-border and international taxation for high-net-worth individuals and entrepreneurs.Website: https://www.studiobcz.it/ Connect with Fabrizio on LinkedIn: https://www.linkedin.com/in/fabrizio-valerio-battaglia-4043b23/Ready to talk through your own situation?Book a call with us at lsrpartners.com. LSR Partners help you pay the right tax in the right place at the right time.lsrpartners.comSubscribe for more tax guidance for expats and globally mobile individuals.Brought to you by LSR Partners – helping you pay the right tax in the right place at the right time.📲 Book a call with us to talk about your situation: https://lsrpartners.com🎧 Catch up on all past episodes: https://lsrpartners.com/podcast-videos

Most people who are planning to leave the UK focus on day counts. How many days can I spend in the UK? When do I need to be gone by? What ties do I have?What they often miss is that the statutory residence test can make you a full year UK tax resident from a single day in the country. Day counts do not always come into it.In Episode 22 of the Tax Compass Podcast, Simon Roue and Laura Sant take on split year treatment: what it is, why it exists, and why getting it wrong can expose you to UK tax on your worldwide income for an entire year.What they cover:Split year treatment exists because the UK tax year runs to its own calendar, out of step with most other countries. When someone arrives in or departs from the UK part way through a tax year, the year can be split so that UK tax residence applies only to the relevant portion. But the starting point is always the full year position. You have to have been UK tax resident before split year treatment becomes relevant at all.On the way out, there are three cases. Case one covers starting full-time work outside the UK. Case two covers being the partner of someone starting full-time work outside the UK. Case three covers ceasing to have a home in the UK, and is the only route available to retirees who are not working. The outbound cases are significantly more technical than the inbound ones, and case one comes with a requirement that is easy to overlook: you must also meet the full-time work overseas test in the following tax year.That requirement exists for a reason. HMRC will not allow someone to split their year on the basis of starting work overseas if they are back in the UK within a few months. For most people going on a genuine overseas assignment this will not be an issue. But for anyone whose circumstances change unexpectedly, for example losing a job abroad, it can create a serious problem.Case three, ceasing to have a home in the UK, carries its own complexity. From the point you cease to have a home, you are limited to a maximum of 15 midnights back in the UK. A home has its everyday meaning under the statutory residence test, so a property that has been emptied of belongings and rented out no longer qualifies as a home even if it has not been sold. But people who plan to spend a few extra days in the UK after moving out need to be careful: those days start counting immediately.On the way in, the rules are more numerous and the matrix of cases more involved. The practical reality is straightforward: if you arrive in the UK, take a job and get a home, you will be tax resident from the point those things happen. The technical complexity on the inbound side is mostly relevant to edge cases, such as someone who arrives late in the tax year and may still fall within the automatic non-residence tests.Simon and Laura also cover the planning opportunities that can arise in the gap between breaking UK tax residence and becoming tax resident somewhere else. A classic example is someone who leaves the UK in October to start work in Spain but does not become Spanish tax resident until the 1st of January. Employment income sourced to where the work is done can create genuine planning opportunities in that window. Pension income is a different matter, and Simon flags this directly: pension income is sourced to the UK and will remain taxable there unless a double tax treaty provides relief.The consistent message throughout is the same one LSR Partners gives to every client considering a move: have the conversation before you make the move. The rules around split year treatment are technical enough that the wrong sequence of events, even by a matter of days, can close off options that would otherwise have been available.lsrpartners.comSubscribe for more tax guidance for expats and globally mobile individuals.Brought to you by LSR Partners – helping you pay the right tax in the right place at the right time.📲 Book a call with us to talk about your situation: https://lsrpartners.com🎧 Catch up on all past episodes: https://lsrpartners.com/podcast-videos

If you are employed and you assume that because your company runs payroll your employment income tax is being handled correctly, this episode is for you.In Episode 21 of the Tax Compass Podcast, Simon and Laura cover the full landscape of employment income and UK tax. This is an area where people most commonly discover either that they have been overpaying tax for years or that they have an unexpected liability they never saw coming. Both situations are avoidable with the right knowledge.Simon opens with the observation that even clients with complicated tax returns often have a comfort blanket of knowing LSR Partners will sort things out. The concern is the clients who think their employment income is simple and therefore does not need checking. It is often those clients who are sitting on the biggest surprises.The episode covers the following areas in detail:How PAYE and tax codes work. HMRC issues a tax code to your employer and your employer applies it mechanically. Payroll has no discretion. If the code is wrong, payroll applies the wrong code regardless. The error sits with HMRC and it falls to you to spot it and correct it. Laura explains how cumulative and emergency codes work differently, and why an emergency code can mean missing out on unused allowances and brackets that you are entitled to.Benefits in kind and the difference between those processed through payroll in real time and those reported via P11D at the year end. P11Ds are being abolished in April 2026 and everything will need to be payrolled, but until then the timing gap between receiving a benefit and having it reflected in your tax code creates a period where you have taxable income that has not been taxed. The episode explains how this works and what to watch for.Pension contributions, covering the distinction between salary sacrifice and relief at source, why the naming of these two schemes is confusing and arguably the wrong way round, and why higher and additional rate taxpayers using relief at source schemes need to claim their additional relief through a tax return rather than assuming the pension provider handles it.The annual allowance and tapering. The current annual allowance is £60,000, tapering down to £10,000 for those with adjusted income above £360,000. Over-contributions create a tax charge that people consistently fail to anticipate, and the episode explains why the first year of exceeding the allowance often catches people with no carry-forward relief available.The upcoming salary sacrifice cap. From a future date, salary sacrifice pension contributions will be capped at £2,000 per year. Simon and Laura are clear that this is a stealth tax rise. Employer National Insurance savings on salary sacrifice contributions above that level will disappear, which will almost certainly lead to employers reducing or removing the matching contributions that currently make salary sacrifice schemes so valuable. The message is straightforward: maximise employer contributions now while the current rules still apply.Equity awards and the £100,000 threshold. For clients whose salary sits just below £100,000, a bonus or equity vesting event can push their total income above the threshold, remove their personal allowance and create a tax liability that neither they nor their employer anticipated. The episode walks through exactly why this happens and why it is more common than people expect.Simple assessment and overpaid tax. HMRC is estimated to have caused around 600,000 people to overpay tax through incorrect PAYE processing. The simple assessment system is designed to catch these errors, but in practice LSR Partners see it failing regularly, including cases where overpayment relief claims are simply being ignored.The episode closes with a reminder that equity is covered in more detail in a separate episode, and with the consistent LSR Partners message: if you have questions about your employment income tax position, get in touch before a problem compounds rather than after.lsrpartners.comSubscribe for more tax guidance for expats and globally mobile individuals.Brought to you by LSR Partners – helping you pay the right tax in the right place at the right time.📲 Book a call with us to talk about your situation: https://lsrpartners.com🎧 Catch up on all past episodes: https://lsrpartners.com/podcast-videos