Contracting with UK LTD abroad: Agency or subcontracting

[yannis]

Hello,

I am a non UK resident / national etc (with no previous links to the UK). I have an LTD for consulting with other non UK companies (eg European). Currently a significant part of the work is carried in countries with no income tax.

To manage offshore expenses and pay employees abroad we are considering:

a) Setup an offshore IBC with an Agency contract with the LTD, the LTD keeps 10% of turnover and passes over 90%. From there the IBC can pay the employees. If employees on a taxable country IBC takes care of withholding taxes or hires through a local umbrella in destination country for the duration of engagement.

b) Setup the offshore IBC as a sub-contractor umbrella, invoicing the LTD on an hourly rate for the hours used on the projects. IBC then pays the employees. If employees on a taxable country IBC takes care of withholding taxes or hires through a local umbrella in destination country for the duration of engagement.

c) Pay directly the employees out of the UK payroll on gross basis either as employees or self-employeed. But there seem to be different views on this as seems HRMC is not definitive on process and lack of NIC etc and seems somehow of a fuzyy method (eg. payment to foreign directors)

In all cases the company will not be trading with UK entities nor will employ any UK resident/nationals.

The (a) scheme is discussed a lot, suggesting a min of 10% profit for the agency company. Is that scheme better than (b) in any way? Better than (c)

Thanks for your support!

[cojak]

If you have no connection with the UK why are you looking at using a UK company?

[yannis]

If you have no connection with the UK why are you looking at using a UK company?

It is much faster and simple to setup and European customers are quite pleased to work with a UK company for their market research in third world countries (vs. some african or arab one or even an IBC in an offshore location).

[WTFH]

How many employees do you have?
Have you asked your accountant?

[yannis]

How many employees do you have?
Have you asked your accountant?

Not many, up to 5 depending on the project size. No permanent employees but on temporary basis for duration of project.

Current accountant is not good with offshore issues (changing it) and thought collective wisdom here could help.

[Lance]

Being very blunt.

You are unlikely to get the advice you need on this forum.

You are not a contractor, and this forum is made up of contractors.
You are setting up a small (very small) consultancy with a complex (very complex) international profile.
You need professional advice. And whilst you may get many opinions on here, most will be wrong or only partially correct. That won't help you.

[cojak]

Being very blunt.

You are unlikely to get the advice you need on this forum.

You are not a contractor, and this forum is made up of contractors.
You are setting up a small (very small) consultancy with a complex (very complex) international profile.
You need professional advice. And whilst you may get many opinions on here, most will be wrong or only partially correct. That won't help you.

Thank you Lance, you've nailed the answer.

We only have experience with 1 person Ltds. You won't find the help you need here.

Sorry.

[eek]

Being very blunt.

You are unlikely to get the advice you need on this forum.

You are not a contractor, and this forum is made up of contractors.
You are setting up a small (very small) consultancy with a complex (very complex) international profile.
You need professional advice. And whilst you may get many opinions on here, most will be wrong or only partially correct. That won't help you.

+1 - you are asking about the creation of a UK limited company to act as a more prestigious front end to your existing foreign company. That isn't something many can help you with here as its not something we need to worry about...

[Fred Bloggs]

But....... For the OP's purpose he/she may wish to look at an Isle of Man Ltd company. It could suit him/her very well including, if required VAT registration to trade in the EU.

[m0n1k3r]

Being very blunt.

You are unlikely to get the advice you need on this forum.

You are not a contractor, and this forum is made up of contractors.
You are setting up a small (very small) consultancy with a complex (very complex) international profile.
You need professional advice. And whilst you may get many opinions on here, most will be wrong or only partially correct. That won't help you.

Correct for the most part but not entirely. I'm a certified accountant (both in the UK and a few other EU countries) and one of the founders of a pan-EU consultancy (a group, not a single company) that has been running since the '90s and that have a decent number of employees now. i'm here mainly in the capacity of a freelancer in a quite different business area (commercial photography for advertising). That doesn't mean I "forget" about my other knowledge when I post here.

I suspect I'm not alone.