Non-Domiciled Employees – Dual Contracts of Employment

Dual or multiple employment arrangements are popular with employees domiciled abroad whose duties are performed partly in the UK and partly outside the UK. HM Revenue and Customs (HMRC) have concerns, however, that such arrangements do not always reflect the true situation and that the commercial reality in some cases is that the employee has just one employment but there has been an attempt to split this in order to exploit the legislation that provides for chargeable overseas earnings to be taxed on the remittance basis.



HMRC will therefore mount a robust challenge where they suspect the arrangements are not genuine. As well as requiring access to certain information from the employee, HMRC may also require access to records held by the employer. Employers are requested to retain all relevant documents for at least two years from the end of the tax year to which the document relates. Where documents are not forthcoming, HMRC will not hesitate to use the powers at their disposal to obtain them.



HMRC have now issued guidance on what documents employers and employees are expected to retain and make available in response to their enquiries into dual contracts of employment, and on HMRC’s technical and policy interpretation of ‘merely incidental’ duties – i.e. duties performed inside the UK that are merely incidental to duties performed outside the UK and so are regarded as having been performed outside the UK. This includes lists of the types of activity that are likely to be considered merely incidental and those that are not, and examples of situations in each category.