UK based contractor with single US based client

[amwac]

Hi,

I'm currently living and working (permanent employee with green card) in the US, and moving back to the UK this summer. My employer wants me to continue working with them, and is trying to get me on the payroll of their UK branch office. They also mentioned that if I wanted to I could contract instead, billing them using a US company in US dollars.

This has me wondering whether I could have a UK LTD company that invoices my US company which in turn would be invoicing my former US employer. My US company would have expenses equal to its income, so no liability there, and presumably I would be able to stay outside of IR35 in the UK. This certainly seems preferable to becoming a permanent employee in the UK.

I realise that this is not a common scenario, but just wondered whether anybody here had any similar experience?

TIA

[northernladuk]

Lots of UK / US threads on here but not really looked at them to see if any of them match your scenarios.

The list of threads below might help if you want to have a dig through them. Just watch the dates, some of them could be pretty old so need to make sure legislation hasn't changed.

https://www.google.co.uk/webhp?sourc...ntractoruk.com

[jamesbrown]

Hi,
I'm currently living and working (permanent employee with green card) in the US, and moving back to the UK this summer. My employer wants me to continue working with them, and is trying to get me on the payroll of their UK branch office. They also mentioned that if I wanted to I could contract instead, billing them using a US company in US dollars.

Assuming you go down this route, why can't you invoice ClientCo directly through your UK company? Having a US intermediary is, in principle, completely unnecessary and, in practice, it will create a major headache, especially given that you'll be filing in both the US and UK, both individually and for your companies in each jurisdiction. Cross-border tax is a nightmare, and dealing with US taxes, in particular, is a nightmare within the new FATCA paradigm.

so no liability there

Liability for what? You'd be a director of a foreign corporation in both jurisdictions. This will be a tax nightmare. If you're leaving the US, I strongly recommend that you cut all ties, including any US bank accounts. You'll also need expert advice about handling your US and UK returns for your year of departure/arrival (note that the US and UK personal tax years are not aligned).

and presumably I would be able to stay outside of IR35 in the UK.

What makes you think that?

This certainly seems preferable to becoming a permanent employee in the UK.

Why? I can think of several good reasons for being an employee of the UK branch. Unless you plan to operate as a contractor in the UK, why bother setting up such a complex arrangement?

[TheFaQQer]

presumably I would be able to stay outside of IR35 in the UK.

Given that the alternative seems to be doing the same job on the UK payroll, I'm struggling to see how you could think that.

The complexity of your situation may make it harder for you to get caught, however.

[Martin at NixonWilliams]

We've had experience of this with some of our clients - Usually when the end client is an overseas company and has a policy of not entering into a contract with a foreign company (I assume this is the case here).

What you have suggested should work from a UK perspective if done correctly and with care, however it is clearly quite complicated. I would suggest that you speak to an accountant in the US to ensure it is compliant and effective there.

Your IR35 position does not change with this or any other structure - Your contract terms and working practices are what is important.

I hope this helps.

Martin

[jamesbrown]

We've had experience of this with some of our clients - Usually when the end client is an overseas company and has a policy of not entering into a contract with a foreign company (I assume this is the case here).

What you have suggested should work from a UK perspective if done correctly and with care, however it is clearly quite complicated. I would suggest that you speak to an accountant in the US to ensure it is compliant and effective there.

Your IR35 position does not change with this or any other structure - Your contract terms and working practices are what is important.

I hope this helps.

Martin

I would strongly recommend against the OP maintaining any sort of US structure. Aside from the complexity in the US, it will make things personally difficult for the OP in the UK to have these US connections (UK banks etc. do not want their clients holding foreign accounts, particularly US accounts post FATCA). I don't see the regulations becoming any more relaxed in future. IMHO the OP has two good options here: 1) a B2B relationship with the US company (which the OP states is possible, but they'll need to take care with certain aspects, such as IR35 and VAT position based on what they've said); and 2) becoming an employee of the UK branch.

Based on the limited information provided, IR35 is going to be an issue for the OP, and they don't indicate any desire to contract properly (just put a structure in place to work for the US company in the UK), so I'd suggest they consider becoming an employee of the UK branch office.