USA contractor with UK client: Question...

danielb · 22nd July 2008, 00:13

Hiya, new here. Looking for some help.

I am a UK citizen moving over to the USA in a month. My UK employer wants me to continue doing work for him, except as a contractor now instead of an employee.

I have a questions regarding my situation:

1) My UK client has never used an overseas contractor before, they say they are not sure how to handle tax.
Usually with an employee, of course they take PAYE out of payslips etc. And with a UK contractor - the contractors charge the client VAT and they obviously report this on their tax filings. But with me, they will not deduct PAYE and I will not charge them VAT directly - I am wondering what they will do at tax filing time? Will they just state that they paid out to a foreign company for services and that will be it, no tax requirements?

I do plan on registering my business in the USA (where I will be living) and not in the UK. So I will be classed as a foreign company to my UK clients.

Need to help out my UK employer in dealing with this situation in order to secure this contract!

Thanks

NotAllThere · 22nd July 2008, 08:02

Quote:

Originally Posted by danielb

Hiya, new here. Looking for some help.

I am a UK citizen moving over to the USA in a month. My UK employer wants me to continue doing work for him, except as a contractor now instead of an employee.

I have a questions regarding my situation:

1) My UK client has never used an overseas contractor before, they say they are not sure how to handle tax.
Usually with an employee, of course they take PAYE out of payslips etc. And with a UK contractor - the contractors charge the client VAT and they obviously report this on their tax filings. But with me, they will not deduct PAYE and I will not charge them VAT directly - I am wondering what they will do at tax filing time? Will they just state that they paid out to a foreign company for services and that will be it, no tax requirements?

I do plan on registering my business in the USA (where I will be living) and not in the UK. So I will be classed as a foreign company to my UK clients.

Need to help out my UK employer in dealing with this situation in order to secure this contract!

Thanks

You invoice them for x hours at £y per hour, don't add VAT. They pay that. Simple.

I've both done this, and had it done to me.

danielb · 22nd July 2008, 11:56

I understand that, thanks

What I am wondering about is at the clients end of year.

I am sure they will have to report who they paid out to and how much VAT. I am wondering what they will report if the company is foreign and there was no VAT?

Will it be as simple as putting '£x : Foreign Company' and the tax office will know there was no VAT involved?