income tax for pro yachties

[1611]

having messed about in dads boat throughout their childhood two of my three children have gained their yachtmasters and are sailing boats around the world for a living.
One works for an australian company in Palma and is paid in euros, the other works for an englishman moving his yacht around the world and is payed in sterling.
what is the best system of banking for them and do they have to pay income tax, national insurance to anyone.
I realise this does not exactly fit with the usual liveaboard question but I thought one of you guys/gals might have an incling.

 

[alandee]

P.M. Sent.

 

[Richard10002]

Care to share with us all?

 

[jeremyshaw]

You normally would have to pay income tax on income earned in the country in which it was earned.

And you would expect to have to pay tax on your income (including that from other countries) in the country in which you are resident for tax purposes. Normally 'double taxation' rules apply so you don't pay twice.

Your children are therefore in an interesting position in that they are probably not earning their income in any country, nor tax resident in any country, assuming they are moving about often enough.

As to places to bank Natwest in Gibraltar (Line Wall Road) are quite helpful in my experience, and can provide Visa, Mastercard, current account, deposit account etc. . You have the advantage of English speaking staff etc. but they understand yachties and offshore stuff. They also have real people! However, like all banks in the EU economic zone, they now have to deduct tax on interest (as UK banks do) unless you can show residence outside the EU. This may or may not be an issue for your children.

 

[jimbaerselman]

There are big differences between theory and practice in this murky area.

Theory in the EU is that if you're resident for more than 183 days of the year in any one country, that's where you're taxable. But there's no reliable means for the authorities to police this other than making assumptions - such as, if the boat has a transit log/other papers which say it's been around for more than that time, there's an assumption that the crew have been there too.

And a lot depends on how the boss owns his boat (through a company?), where it's registered, how that company is audited and what jurisdiction it's employees come under. Mostly, of course, flags of convenience are used with no audited tax regime for employees.

It's the boss's job to define how they're paid and to ensure that taxes and national insurance are paid. It is, however, quite possible that he does nothing about this and just assumes that his guys are self employed (a common ruse) and hands cash to them. It's then very easy to escape national insurance and income tax.

The problem with escaping national insurance is that you have no rights to a range of benefits . . . including national pension schemes and (in some coutries) free health care.

So, sometimes it pays to declare your earnings and pay up like a good guy. If so, choose the most appropriate country . . .

Messy isn't it. Too many ifs and buts to answer your question really.

 

[Richard10002]

If they want to be truly legitimate, and are not interested in hiding anything, you could call the Inland Revenue and see what they think/say.

You could also take a look through some of the Revenue information on the web:

http://www.hmrc.gov.uk/manuals/

http://www.hmrc.gov.uk/cnr/

http://www.hmrc.gov.uk/pdfs/ir20.htm

http://www.hmrc.gov.uk/individuals/fgcat-individualtaxreturn.shtml

Hope this helps

Richard

 

[1611]

Thanks for all your sugestions and links. It doesnt seem to bother the kids. Maybe Im concerned unnecessarily. But you do still worry about them even though they are grown up and wandering the world.

 

[Richard10002]

It might not worry them, nor may it cause any problems... but it might just bite them on the bum in the future - I'm thinking mainly of the lack of NI contributions like Jim, (I think it was Jim).

 

[DinghyMan]

I paid full NI for 6 years when I was abroad, sorted out being non-resident whilst out, other half did not earn or pay any voluntary NI. When we came back I was not entitled to anything "because I had been abroad" other half was fully entitled to beneits and could claim for me. When we go again we will not be paying anything into UK.

 

[jimbaerselman]

We employed quite a lot of young people overseas. We paid their UK NI contributions, and protected their UK interests by ensuring they did not live in any one overseas country for more than 183 days in a year (calendar year in some, tax year in others). They could choose to be paid as employees, taxed in UK, or be self employed. We recommended that self employed people make up a tax return in UK to protect their residence status and rights to National Health benefits, winter un-employment pay or whatever.

Since many of their employment benefits were 'in kind', (travel, accommodation, some clothing, some food) their expenses overseas were very low, and even though junior wages only just pentrated the 10% tax level, many were able to save a thousand or two over a season. Mind you, some blew the lot on booze . . .

 

[robind]

I know that some of the ferry operators paid their staff in the west indies and that staff were then responsible for their own arrangemets. Have your kids got their "ships and seaman" registration documents ( seamans ticket/log) which will enable them to get health care where ever they need it ? maybe that crowd will have some info. its the same people that administers (used to) the part one registry, I think