Filling Out Form 11 Foreign Employment

[charlie]

Hi,
I'm having difficulty with Form 11
My situation is that I work from home in Ireland for a British company that I worked for before I moved here. I am paid quarterly based on a contract and am not on PAYE. I am resident in Ireland and pay my taxes here. At least 90% of my work time is spent on the computer/phone at home and I visit Britain 4 or 5 times a year for 2 or 3 days for meetings.
On Form 11 there seem to be 2 possible places for me to enter my income but neither quite fits my exact situation:
1. In the "Foreign Income" Section there is a "Foreign Employment" Section which says
"Gross income from Foreign Employments attributable to the performance outside the state of such employments - on which Transborder Relief is not claimed"
and
2. In the "PAYE/BIK/Pensions" Section under "Employments" it says:
Gross amount of income subjected to PAYE attributable to the performance in the State of the duties of foreign employments.
The first doesn’t seem to apply because I perform most of my duties inside the state and the second doesn’t seem to apply because my income hasn’t been subjected to PAYE.
There is a big difference in the calculation of tax depending on which of these I enter this income in, as there is no PRSI or Health Levy shown when I press calculate on the second.

Can anyone help with this?

 

[Breninio]

There are a couple of things you need to watch here. From your e-mail I understand that you used to work for this company in the UK as an employee but now carry out duties for the same company on a consultant basis. Revenue (in the UK and Ireland) could query whether you have in fact left the employment of the UK company. They would look at such things as whether you provide your services exclusively to this UK company and whether the UK company directs how, where and when you should work etc etc. If it was found that you had not ceased as an employee of the UK company then that company would have PAYE issues (Ireland and the UK) and Irish corporation tax issues to consider.

Assuming this is not the case then you are a self employed consultant working in Ireland. As such you should not be including the income any where near the employments sections of the Form 11. I would have thought that the relevant income as calculated under the rules of Schedule D (i.e. income less deductions etc) should be included as trading income on the form. Irish PRSI etc should also be due.

 

[charlie]

Hi,
Many thanks for your help with this.
Looks like I'm in trouble here as I've been doing this for several years now (inputting my income on Form 11 as Foreign Employment (in previous years I can't recollect it stating that the duties had to be performed outside the state).
I would say that what you say in the first paragraph is true i.e. I could be considered an employee - what do I do now?
My approximate remuneration in that time has been about 20k pa. (joint assessment with my wife who was earning 40 - 50k pa in this time). Am I likely to face a massive tax bill?
Thanks again.

 

[Breninio]

Hi,

Whether you should be considered an employee of the UK company is more an issue for the UK company than for you. They are the ones who may have a PAYE or corporation tax exposure, so I wouldn't worry too much about that.

On the basis that you are a self employed contractor you should just ensure that all the Irish tax and social security due under the self assessment system has been paid. If you have reported the income somewhere on the tax return and paid Irish tax on that income then there shouldn't be an underpayment of tax. You may just want to send a quick letter to Revenue confirming that you have noticed that you included the income in an incorrect box on previous returns (although if the correct tax has been paid this may not be necessary, just include it in the correct part of the return going forward). Have you paid Irish social security on the income in previous years? If not there may be an amount due although on 20k it won't be that much. In fact, I'd have to look at threshold amounts but for the last couple of years I don't think the health levy would be due but it would only be the 3% PRSI (would have to check that). PM if you need any help with getting your taxes in order.

 

[charlie]

Hi
,
Thanks again.
Yes I do need help to get my taxes in order! I don't really understand the self employed section - do I need to produce my own profit and loss accounts?

Re: PRSI, last year I paid 3% PRSI and 2% health levy on income of 22812 (total 1140.60). The income was mainly from my contract, but also included some from bank interest from the British bank account I have my salary paid into.