Changing tax residency and charging own UK LTD

[Fred Bloggs]

What is with the raft of stupid tax evading ideas recently?

Possibly because the "fully compliant HMRC approved tax avoidance schemes that have QC opinion" that folks used are unravelling?

[Lance]

What is with the raft of stupid tax evading ideas recently?

Cos it's perceived as easier than actually running a proper business.
I don't know where they get the time to think of these wheezes.
One would have thought that for the extra 20, 25, 30% of cash in the hand that effort would be better used upskilling, or finding some better customers.

And they wonder why the 'tax man is out to get them'.

If dividend tax goes up to 32.5%, or even 40%, across the board, that's just life.
It's not likely to change much other than inside IR35 jobs become less to whinge about. It's not going to change what I do, or how I do it.

[BlasterBates]

If you are resident in another country you will need to register yourself there. You can bill through your UK but not work for it. i.e.
self-employed in foreign country->bill UK Ltd -> bill client

There will probably a bit of profit in your UK Ltd, taxed in the UK but most of what you earn will be in the foreign country. You'll need to consult your accountant.

It would be best obviously to bill directly from the foreign country. In that case there should be no tax to pay in the UK, other than perhaps VAT.

[BlasterBates]

What is with the raft of stupid tax evading ideas recently?

If you move to and work in a foreign country it is not tax evasion. It's only tax evasion if you remain in the UK but work through a foreign company.

[northernladuk]

If you move to and work in a foreign country it is not tax evasion. It's only tax evasion if you remain in the UK but work through a foreign company.

If done properly yes. The posts we have been having recently are just nonsensical ideas to save a quick buck.

[Eirikur]

Other countries have their version of IR35 as well and sometimes much stricter

[twickenkam]

But if you actually want to move overseas and work, then why not set yourself up properly there rather than invoicing through a UK company (you should be able to retain the UK company, if you want, although bear in mind that its corporate residence will probably move with you).

Thank you for this jamesbrown. I am doing some background reading to try understand what I dont know. Do you know roughly please what conditions move and what dont cause the move (apart from my move)? Is this an aspect of Controlled Foreign Corporation ?

[jamesbrown]

Thank you for this jamesbrown. I am doing some background reading to try understand what I dont know. Do you know roughly please what conditions move and what dont cause the move (apart from my move)? Is this an aspect of Controlled Foreign Corporation ?

No, that's something different. Many jurisdictions have CFC legislation, but the goal there is to prevent tax avoidance by registering a company in a low-tax jurisdiction.

The point I am making is about corporate tax residency more generally. The rules on corporate tax residency vary depending on jurisdiction, but the general pattern is that a company is treated as tax resident in its jurisdiction of incorporation OR the jurisdiction from which it is "centrally managed and controlled" or "effectively controlled" or the "place of effective management" or some similar combination of words. Thus, if a sole director moves overseas, then the company is effectively managed in that overseas territory. In the UK, these rules mean that a company registered in a foreign jurisdiction that is "centrally managed and controlled" in the UK is UK tax resident. The words "centrally managed and controlled" mean, for example, that the director/s live in the UK and hold meetings in the UK.

[jamesbrown]

Incidentally, there was quite a lot of noise about corporate tax residency towards the start of the pandemic where concern grew that companies might establish a tax residency or permanent establishment in a foreign jurisdiction because directors had started to work remotely, overseas.