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**Hugh** · 20-04-2014, 10:06

Interesting article about the potential impact on those who would be classified as "cross-border" workers should Independence come about....

http://www.theguardian.com/money/201...nsions-workers

Quote:

Accountants warn a yes vote will spark concerns over double taxation (new treaties would need to be signed very quickly), issues over residence, and which country has taxing rights. Some even believe that England will become a destination for Scots seeking to avoid higher tax rates north of the border. "A tax haven could be a train ride away – and it seems more likely that will be from Edinburgh to Berwick rather than from Hampshire to Glasgow," says Douglas Connell of Scottish lawyers and tax specialists Turcan Connell. Clients, he adds, are already concerned about capital taxes, such as inheritance tax, and might flee south if a Conservative government in England cuts IHT while Scotland maintains or increases it.

Residence is the key principle in personal taxation. Anyone deemed as resident in the UK is taxable on their worldwide income. The same would almost certainly apply if Scotland goes independent; residents would pay tax to Revenue Scotland on their earnings worldwide, including England and Wales. But income may also be taxed locally (through PAYE in England or Scotland), then be liable for tax again in the resident's country (whether that be Scotland or England), with workers caught in self assessment in both countries, and employers burdened with highly complex payroll issues.

A person resident in England for more than 183 days is automatically England-resident. But those who work sufficient hours in Scotland (at least 35 a week) are automatically resident in Scotland. So the Berwick-upon-Tweed resident could find him or herself resident in both countries for tax purposes. Baker Tilly tax partner, Andrew Hubbard, says the UK has 120 double taxation agreements and an independent Scotland would need to urgently draw up a similar number – crucially with the English.

Britain's only international land border is between Northern Ireland and the Republic, and it provides the likely template. Accountants in Newry and Dundalk, accustomed to dealing with cross-border workers, talk about individuals fined over self-assessment failures, companies dealing with complex payroll problems, and practical difficulties dealing with VAT, inheritance tax, CGT and corporation tax – but happily admit that it creates a "bonanza" for their trade.