Offshore recommendations?

[DeepBlue]

Hello all,

I'm just starting my foray into contracting. I was a permie for 4 1/2 years, and the time has come for a little more adventure.

I've been offered a 6 month contract (IT) in Aus, and prior to that, sprung on me on Friday, was 2 months in Indonesia. So far this tax year I've spent 4 months out of the country. I will almost certainly not be returning to the UK for some time. Going to give the Perpetual Traveller lifestyle ago... spent 2 of those 4 months away learning to be a diving instructor

So, I fully intend to be a UK non-resident, but I have a few questions about this.

Can I be tax non-resident and keep a) my ISA savings/investments? b) my personal bank account and credit cards?
I mean, I can certainly keep them, but would they be barriers to me being tax non-res?

Can someone give a good recommendation of where I might want to create a company/invoice from? My understanding is it would be best to choose somewhere where I might wish to be domiciled in the future? Which also has great taxation agreements with most countries around the world?

I'm guessing a UK Ltd would be considered to be managed from the UK. I don't believe I can carry out the plan I would like to as a UK sole-trader.

Would be nice to have the bank account in a stable country. E.G. As much as I enjoyed my time in Belize, I don't want my $$$ tied to the US Dollar at this point.

Thanks in advance.

[TinTrump]

Can I be tax non-resident and keep a) my ISA savings/investments? b) my personal bank account and credit cards?
I mean, I can certainly keep them, but would they be barriers to me being tax non-res?

I'm based in the Middle East. AFAIK, you can keep them without damaging your case for being non-resident for UK tax purposes. You can't continue to pay into certain investments, e.g. ISAs, but you can into others, such as a Stakeholder pension, to a max of about £2800pa. Having a property that is available to you in the UK is more relevant; if you can answer 'no' to this, so much the better. As mine is rented out, that's what I've done. Also the income isn't taxed at source. The relevant form is P85.

I've kept my Cater Allen current account and they don't charge for my withdrawals abroad. I've tried to keep cards to a minimum to avoid juggling too many things, but a back up debit/credit card is a must.

Good luck and have fun!

[DeepBlue]

Great reply. Cheers! I was assuming most of what you answered, nice to get someone elses understanding.

Of the people I will be working with has been a fiscal nomad for a few years. He has some advice which is excellent, and some which is... interesting.

I've been looking into where I can incorporate/declare sole-trader cheaply and easily with low corporate tax. My understanding is that I can't trade as a UK sole-trader if I wish to be tax non-resident... so I need a legal entity somewhere.

Looks like most options cost me £1000+ for registering and £1500+ per annum. Not a lot compared to saved tax, but there has to be a cheaper way of doing it...

[rootsnall]

You'll probably be OK in Indonesia ( and the Middle East ) but once you get to Oz ( and other 'developed' countries ) you'll get tied up in their tax laws and probably find it difficult to get paid directly into an offshore account. I did a lot of nomadic contracting and found it impossible to keep on top of my tax situation. In the end I just settled for paying my due in wherever I was at the time and then crossed my fingers I'd never get dragged into any cross border investigations. It was a few years back and I seem to have got away with it !?! You'll get offered various schemes along the way, in almost all cases I think they were dodgy ( and expensive ) and the providers would of been nowhere to be seen if it went pear shaped. Saying that I'm sure the people who went into the schemes paid less tax than me and have never had any comeback. Enjoy !

[DeepBlue]

Hi Rootsnall,

Yep, I'm well aware that Aus is going to be the trickier of the two. However outside income is not taxed on the visa (that's my current understanding anyway). That said, yeah, like yourself, I wouldn't mind too much paying tax to Aus if it kept the tax office off my back. I'm not looking to do any tax evasion, just a little tax avoidance.

Am looking seriously at incorporating in Singapore. Low tax on corporate profits (after paying me my dir's salary it will be quite small), tax exempt as of the last budget on foreign income remitted into the country! (Though that could disappear pretty fast, don't have to do my banking there).

Schemes look attractive, but unless you understand the exact mechanics... I'm not interested. And they won't tell you the exact mechanics until they have at least some of your money!

[DeepBlue]

Damnit. Singapore is no good.

Non-resident directors fees taxed via a withholding tax of 20%.

Next candidate? Unsure. (That said, banking in SG looks ideal).

EDIT:
Scratch that, can pay dividends to directors tax free. Looking good in SG... just need to add another "flag" to contain the bank account to the income earned outside of SG does not enter SG, and get taxed(!).

[rootsnall]

I'm too out of date on Oz to advise properly but if you are non tax resident then there used to be pretty decent perks in the form of tax free daily allowances. Setting up an Oz Ltd and utilising the daily allowances got your tax bill pretty low, low enough to not bother with offshore solutions in my case. Now !?

You sound like you are looking into things thoroughly. You'll soon hit the point were you can see big holes in most of the schemes and start correcting the 'experts' ! I did one multi country job were I got some paid for tax advice from PWC ( in Oz ). A graddie did my tax return for me, it took me 5 mins to see they hadn't a clue, I worked my way up the chain of command until a senior bod admitted it was just too messy and there wasn't a clean solution. It was after that I went for the approach of paying my dues locally and crossing my fingers.

[McFly]

Why not using an offshore umbrella? I do and i feel it's quite convenient this way. They take care of local salaries if that's needed, else i take all as dividends.