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20 September 2011
Issue: 4322 / Categories: Forum & Feedback
A UK-resident higher rate taxpayer became a director of a company in the Republic of Ireland. Double taxation relief was claimed on the UK self assessment tax return for tax paid in Ireland, but £2,000 Irish tax was later repaid and then paid over to HMRC. Is it right that a penalty should be charged?

In 2008/09 my client (a higher rate taxpayer) became a director of an Irish company and was paid net of Irish PAYE tax of £13 500 shown on the 2008/09 return as double taxation relief (DTR) being rather less than 40% of the gross income.

When preparing the 2009/10 return (in July 2010) I realised that the Irish PAYE system had refunded £1 000 of this 2008/09 tax later in 2009 (they operate a calendar tax year and I had not picked this up when doing the previous year’s UK tax return). I amended the 2008/09 return and reduced the DTR by that amount.

HMRC sent an aspect enquiry letter questioning the 2008/09 DTR (they overlooked my amendment) and subsequently asked for confirmation that the DTR had been limited to the minimum foreign tax liability.

I had no way...

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