Selling services to the UK via foreign company (Hong Kong)

[Robinho]

Now that i barely spend any time in the UK and serve clients entirely remotely i am looking to get off the UK tax regime.

My idea is to set up a company in HK (no corp tax on foreign income) shutting down my UK one and gaining residency in a country that does not tax foreign personal income (numerous options). My current client has indicated they are willing to make the switch to a HK based company.

First of all, I was rather hoping this forum might be so kind as to sanity check the idea.

Also will i be liable to charge/pay UK VAT? I'm struggling to figure out where place of supply would be.

Any other ways they could do me?

TIA

[northernladuk]

Not sure the answer to your question but just thinking out of the box.. This one client might be OK with that, a little surprising but not unheard off, but what about future/new clients. I very much doubt they many will be too pleased with that set up. Isn't it possibly short sighted to set up a structure that generally won't work for your clients?

[malvolio]

Basically money earned in the UK is taxed in the UK; that's where some of the earlier schemes came unstuck. And selling services, as opposed to goods, makes that much more difficult to circumvent.

I suppose your idea is possible, but you will need some serious expert opinion

[Lance]

Not sure the answer to your question but just thinking out of the box.. This one client might be OK with that, a little surprising but not unheard off, but what about future/new clients. I very much doubt they many will be too pleased with that set up. Isn't it possibly short sighted to set up a structure that generally won't work for your clients?

No agency will touch a setup like that. Too much exposure for them if it turns out to be questionable to HMRC.

You're right in that it might work for a few known clients.

It's something the OP might consider towards the end of a career, or entering semi-retirement. Anything else would be short-sighted IMO.

[Robinho]

Oh yeah it would be mostly riding on my current client, but it would pay off very quickly so i'm not too concerned about that. It's a worthwhile risk, if it can work. Worst case you might be 5k down and have to had done a lot of paperwork for nothing. Best case you're 100k+ up after a few years.

[Lance]

Oh yeah it would be mostly riding on my current client, but it would pay off very quickly so i'm not too concerned about that. It's a worthwhile risk, if it can work. Worst case you might be 5k down and have to had done a lot of paperwork for nothing. Best case you're 100k+ up after a few years.

Then you need to

* find out the requirements for the new jurisdiction, and see how it works
* remove yourself from the UK tax regime
* find out what happens about medical insurance ( presumably no reciprocal health agreement with the UK will be in place)
* UK state pension and how affected (should you still voluntarily pay some NICs for that?)
* if you ever do come back how do you repatriate the money?

[Robinho]

Then you need to

* find out the requirements for the new jurisdiction, and see how it works
* remove yourself from the UK tax regime
* find out what happens about medical insurance ( presumably no reciprocal health agreement with the UK will be in place)
* UK state pension and how affected (should you still voluntarily pay some NICs for that?)
* if you ever do come back how do you repatriate the money?

I know, that's why i logged on to the ContractorUK forum - get people to do the donkey work for me.

[WordIsBond]

I know, that's why i logged on to the ContractorUK forum - get people to do the donkey work for me.

A donkey is half way to a mule, and so is likely to be too stubborn to read something this long. So I'll give you the link but you are then on your own.
Place of supply of services (VAT Notice 741A) - GOV.UK

[Robinho]

Ok so it looks like i will have to charge VAT, which is no biggie although a slightly annoying overhead. Shovelling money to a HK account only to shovel it back to HMRC. There is also no exemption threshold for foreign businesses.

The next question is whether i will be liable for UK corporation tax.

[northernladuk]

Ok so it looks like i will have to charge VAT, which is no biggie although a slightly annoying overhead. Shovelling money to a HK account only to shovel it back to HMRC. There is also no exemption threshold for foreign businesses.

The next question is whether i will be liable for UK corporation tax.

Yes