March 2021
A client’s employee wished to leave her job as she was moving back to India. Client requested her to keep on working for few months from India until they found a replacement.
As per HMRC guidance I advised them to submit P85 to HMRC.
Client called HMRC and was advised by the specialist team to complete DT individual form, print it off and get it stamped by the Indian Tax Authority. Once it is stamped it will need to be passed on to HMRC who will issue employer with an NT code (no tax deduction ) but until then employer will keep deducting tax in the UK and run payroll in usual manner.
The moment employee is issued with an NT code employee does not pay tax in the UK. Only when P45 is issued employee will be reimbursed any tax overpaid.
July 2021
As expected when employee approached Indian Tax authorities, they made excuses to certify the DT Individual tax form.
April 2023
Employee moved to invoices basis.
Conclusion
In such cases, where employer is small organization, employee should move to invoices basis asap and submit P85 to HMRC. After employee moves to India, employment earnings become taxable in India not in UK, so employee should declare it on their Indian tax return.
Title of this article inspired by a play – Hassan: The Story of Hassan of
Baghdad and How He Came to Make the Golden Journey to Samarkand
by James Elroy Flecker
Roy Accountants 