UK employer is not providing tax forms

rg1 · Post by **rg1** » Tue Apr 11, 2006 4:24 pm

Hi, I am an Indian working in UK on work permit.

I work for an Indian IT firm. My employer does not issue any tax related forms P45/P60.

They claim that they pay tax not at individual level but at corporate level.

They claim that the money they pay us in UK is allowance and the money we get in India is salary! Indeed we get paid here as well as in India (simultaneiously). They have over 2000 people working for them in UK and none of them get tax document in UK.

So, what is the real story???

MunneRaja · Post by **MunneRaja** » Tue Apr 11, 2006 4:48 pm

It is common, they pay you allowances which is not taxable for first two years.

e.g. if you stay in the UK for more than two years then after two years they will pay tax for your allowances otherwise not.

This is what my company said and yes after I completed my two years they paid tax and everything regularly. I got my P60 and P45 as well but only after I completed my two years in the UK

rg1 · Post by **rg1** » Tue Apr 11, 2006 4:51 pm

Well, if they don't provide me tax form, how do I prove my income for HSMP of similar application?

Many people in the company are working in UK over 2 years. None of them get any tax form even after 2 years!

Also, they write the salary in WP as if they are paying full tax. They don't pay as much they write in the WP.

Post by **John** » Tue Apr 11, 2006 4:55 pm

So, what is the real story???

I think that the real story is that HM Revenue and Customs would be very interested in this!

MunneRaja · Post by **MunneRaja** » Tue Apr 11, 2006 4:57 pm

They must be providing you the salary slip, dont they? You can send that to HSMP team. for second proof you can get a letter from your employer stating what is your salary here.

If people from your company have been working here for more than two years and they dnt pay tax then I think you need to confirm with them. I told you what my company did. They did not pay Income tax for first two years and after that they start paying tax.

Just curious, which company are you working with?

rg1 · Post by **rg1** » Tue Apr 11, 2006 5:05 pm

I am entirely confirmed that no one of Indian intra-company-transfer employees get tax related forms in UK. Irrespective of their length of stay in UK.

The company is Tata Consultancy services.

They have offices all over the world. Recently someone in USA sued them for tax evasion!

see here
http://www.indianexpress.com/full_story ... ~TCS~in~US

I think they are doing same thing in UK.

Smit · Post by **Smit** » Tue Apr 11, 2006 5:55 pm

Sounds like tax evasion, misrepresentation, breach of UK immigration laws etc etc. And who will pay for this? The Indian workers of course, who are treated as highly skilled coolies!

indian_in_uk · Post by **indian_in_uk** » Tue Apr 11, 2006 6:15 pm

Thats wrong then mate.

if they provide anything then they are doing something wrong I guess..

Maverick123 · Post by **Maverick123** » Mon Apr 17, 2006 5:40 pm

I have been paid allowances besides with my WP salary while on deputation to uk from india. i m on uk payroll past 18 months. is this possible to show these allowances as my earning whilst applying for hsmp ??

pantaiema · Post by **pantaiema** » Tue Apr 18, 2006 8:46 am

rg1 wrote:Hi, I am an Indian working in UK on work permit.

I work for an Indian IT firm. My employer does not issue any tax related forms P45/P60.

They claim that they pay tax not at individual level but at corporate level.

???

Dear John

We know that you are a tax consultant:
Is this statement is true that the employers could pay tax at corporate level for its individual empolyees ?.

To get tax related forms P60 (end of year certificate) is that a right to get from employers or not ??

Pantaiema

try-one · Post by **try-one** » Tue Apr 18, 2006 9:00 am

It looks like TAX evasion.....
http://www.hmrc.gov.uk/nic/work/emps-abroad.htm#e

Earnings paid outside United Kingdom
It makes no difference where or by whom, the employee is paid.

For example, if part of the earnings are paid outside the United Kingdom, or earnings go to dependants overseas, you must add these earnings to payments made in the United Kingdom.

Your work permit was for a particular ammount in salary ££; do you get that money?
Your payslip must show the TAX, NI, contributions to date...are those real?
You must review the approach that your employer is taken because it looks like dumpling...bring people form abroad pay them salaries abroad and reduce the local market price.....
Looks like they are breaking the immigration laws, employment laws and commercial practices....

TAX at corporate level has bsolutely nothing to do with employment taxes; in fact the employer acts just as the middle man between the employee and the Inland Revenue....my previous employer took all my NI money and never paid it to the Inland Revenue before getting bankrupt.......so my pension will be a few years short....the tax money is yours; they just take it fromthe paycheck and send it to the government.

Post by **John** » Tue Apr 18, 2006 9:45 am

Is this statement is true that the employers could pay tax at corporate level for its individual empolyees ?

All I can say is that I have never heard of such a provision. I have no reason to think that is correct.

To get tax related forms P60 (end of year certificate) is that a right to get from employers or not ??

All UK-based employees are indeed entitled to get a form P60, no later than 31st May, if they were employed at the end of the tax year on 5th April. If they leave the employ prior to a 5th April then they should be handed a form P45 instead.

rg1 · Post by **rg1** » Tue Apr 18, 2006 10:29 am

Chaps,

From your replies it seems that there is some foul play.
But the company is very large (over 50,000+ employees worldwide). They have several lawyers in their disposal. They are not so fool to commit some grave mistakes.

I think only employees, that is us, is kept in the dark - so that we face problem in HSMP application or company switching...

by the way, in our payslips, we get no information of NI or tax. Only living and housing allowance is mentioned.

try-one · Post by **try-one** » Tue Apr 18, 2006 10:44 am

Rg1:
Do you have a copy of your workpermit?
how much was the salary stated?
Is that the ammount you get in the UK? Is that the combined ammount?
is it nowhere near the combined ammount?
Thanks

Post by **John** » Tue Apr 18, 2006 10:47 am

rg1, the procedure you describe, is this for only a limited amount of time after a particular person arrives for work in the UK, or does that treatment carry on indefinitely?

I am just wondering if they are trying to make use of a provision in the Indian-UK tax treaty?

And although the person is working in the UK, what happens as regards their Indian tax situation? Are they still treated as having earnings taxable in India?

rg1 · Post by **rg1** » Tue Apr 18, 2006 11:27 am

When I contacted my employer, they said the salary written in WP (in £) = my UK allowance (£ - assumming I'm paying tax) + my Indian salary (£ equivalent of Indian Rupees).

Now my doubt is that, they showed the salary in WP assumming that I am paying taxes in UK. If that is true, then my UK salary + Indian salary comes around 75% of my total salary shown in WP.

So, basically they calculated WP salary on the basis of tax payment in UK. Yet I'm not getting any tax forms in UK. That makes me believe that they are playing some tricks!

My tax is paid in India thruout normal manner and there I get all tax documents.

Also, somebody told me that for this reason they use the term "allowance" in UK and "salary" in India.

Post by **John** » Tue Apr 18, 2006 11:32 am

That is useful.

Can you answer :-

rg1, the procedure you describe, is this for only a limited amount of time after a particular person arrives for work in the UK, or does that treatment carry on indefinitely?

That is, are they only doing this for a limited time after a particular person arrives in the UK?

rg1 · Post by **rg1** » Tue Apr 18, 2006 11:38 am

I was told that first 2 year is tax free. Even though they write WP salary based on as if paying tax.

But I'm also sure that even people in same WP, after 2 years, still not getting P45/P60 forms.

MunneRaja · Post by **MunneRaja** » Tue Apr 18, 2006 11:43 am

The company I used to work for is one of best in the world. I was deputed to their UK office for a project.

They also did the same and I think this is because of some Indian-UK tax treaty.

The thing is your salary is being paid in India and you pay taxes in India on your salary whereas you are paid allowances in the UK and they are not taxable for first two years (but you pay NI as I have checked my old salary slips). After two years, you will pay full tax on your allowances in the UK as well.

This is my understanding and John may shed more light on this.

sudeep_n · Post by **sudeep_n** » Tue Apr 18, 2006 6:09 pm

I worked for such employer in the UK for five years. I got my ILR and also Naturalisation - no issues.

I enquired with the company about it so many times and had the same issue. The answer I got and verified by a tax consultant who works for such companies -

a) There is a scheme called ex-pat returns
b) Under which they bring in technical employees (not the sales / admin employees) for limited period upto 2 years in the UK
c) there is a provision in Indo-UK tax treaty that it will not be NIable and taxable in the UK so long the intention is to return from the UK within 2 years
d) That's why most of these companies have a policy to send back employees before they complete 2 years under the sweet name of 'Rotation'
e) However, business requirements many times force them to continue some employees beyond 2 years
f) Theys start pating tax from 6th April of the fiscal year in which the respective employee completes 2 years
g) The NI number is not necessary to make these payment - HRMS can identify employees based on name, birth date, address etc.
h) Company adds Indian Income as well as UK allowances and pays the NI and taxes
i) They can issue the P60s / P45s etc. They dont just because the admin staff is not sufficient to handle the workload and they just like to avoid that
j) There are some bad minded people in the management who think by doing this they can prevent people leaving them in the UK / get HSMP / get ILR
k) But they dont realise that it does not matter because smart employees get somehow some letter from admin and get ILR. Since they anyway pay taxes it does not matter during naturalisation.

Now before I get bashed please understand this is the version I got from the company and the consultant after probing several times. And my friends in similar companies gave me similar account.

There is one more trick these cos play - send employees for 3 months or more to India and according to them the clock is reset !!!

The companies are the top 5 Indian IT Companies without revealing any further names.

Post by **John** » Tue Apr 18, 2006 10:55 pm

sudeep_n, no one is going to "bash you" for posting that ..... a helpful contribution.

Having just waded through the UK-Indian Double Taxation Agreement, the only bit I think is relevant here is Article 21 :-

DT9620 - DT: India: double taxation agreement, Article 21: Students and trainees

-: as extracted from part of one of the HMRC Manuals.

So what are we saying here? Are these people "securing training required to qualify him to practise a profession or a professional speciality"? Is that what is happening?

sudeep_n · Post by **sudeep_n** » Wed Apr 19, 2006 9:26 pm

Thanks John. Last time I posted something and people jumped up and down on me....someone too smart claimed I am not doing good in my career etc. I fear specially some senior members here. Dont want to offend their feelings..

coming to the point ........Interesting observation from bilateral tax treaty.....these companies can do anything....no wonder all of them are posting 40% - 50% growth for so many years....look at TCS, Satyam, Infy, Wipro results

http://markets.moneycontrol.com/india/n ... cle/210559

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