Working in UK for Italian company

**SallyPlanIT** · 20 October 2010, 09:47

Originally posted by piede828 View Post

Hi, I am an Italian iPhone dev and I've just moved to London. I am keeping my job as a consultant with an Italian company. Since I will be in London most of the time, it looks like I have to register as self employed. I was thinking if registering just as self-employed is the best option or if I should register for VAT too. What would you suggest?

thanks

Hi,and welcome to England.

Registering as a sole trader (self-employed) would depend on what type of work you are going to be doing. If you intend to do contract work then you are not able to do this as a self-employed person. You would need to either incorporate a limited company or trade via an umbrella organisation.

Depending on how much of the time you intend to reside in the UK will depend on whether you declare your worldwide income for tax purposes in the UK or in Italy. This would be declared by filing a self-assessment tax return form each year. The UK tax year runs from 6th April to the following 5th April. Tax returns have to be submitted by the following 31st January after the tax year end.

You do need to complete form P86 and file it with your local tax office.

With regards to registering for VAT, this also would depend on what type of work and how much turnover you expect to make annually. The current legal requirement for registration is £70,000 per annum. If you will be below this limit and you provide services to the public then it's better not to register as anyone who is not VAT registered cannot recover the VAT that you have charged. However, if you will be invoicing companies then the majority will be able to recover their VAT. There is also a scheme called the VAT flat rate scheme which can be beneficial for some businesses.

I would advise that you speak to an accountant who will be able to advise the best course of action.

Good luck.

**piede828** · 20 October 2010, 11:16

Thanks for the great reply. Let me just ask a couple more things:

- What do you mean with "If you intend to do contract work then you are not able to do this as a self-employed person"? I intend to work as a consultant and not as an employee. I won't get any monthly salary but a compensation for the work done on different projects.

- I will be invoicing an Italian company mainly and I won't go over the £70,000\annum. Should I register for VAT?

Thanks again, this is of great value to me. I am planning to stay in UK a year at least.

**SallyPlanIT** · 20 October 2010, 12:44

So you will be contracting your services to companies. Some agencies will not engage the services of contractors as self-employed workers.

You have the choice of working through a limited company or under PAYE through an Umbrella Company.

To assist you in making a choice, google a calculator that compares limited company V umbrella. Using one of these will give you an idea of the net take home pay.
Making a choice does not depend on money only. There are many other considerations including our myriad of legislation in this industry.

You need only consider registering for VAT if you form a limited company. It would probably benefit you to register on the flat rate scheme.

It is advisable to have some professional advice, especially as you state that you intend to be in the UK for one year.

**Hex** · 20 October 2010, 12:58

Originally posted by SallyPlanIT View Post

So you will be contracting your services to companies. UK law does not allow contractors to work as self-employed.

You have the choice of working through a limited company or under PAYE through an Umbrella Company.

To assist you in making a choice, google a calculator that compares limited company V umbrella. Using one of these will give you an idea of the net take home pay.
Making a choice does not depend on money only. There are many other considerations including our myriad of legislation in this industry.

You need only consider registering for VAT if you form a limited company. It would probably benefit you to register on the flat rate scheme.

It is advisable to have some professional advice, especially as you state that you intend to be in the UK for one year.

Hi Sally - why do you say "UK law does not allow contractors to work as self-employed". I know of no law that prohibits this. Most agencies won't deal with self employed contractors because the agency can be liable for unpaid self employed tax, but I don't believe there is a law against it.

The OP already has a customer lined up and so I think they can be self employed as long as both parties are ok with this.

**SallyPlanIT** · 20 October 2010, 13:35

Originally posted by Hex View Post

Hi Sally - why do you say "UK law does not allow contractors to work as self-employed". I know of no law that prohibits this. Most agencies won't deal with self employed contractors because the agency can be liable for unpaid self employed tax, but I don't believe there is a law against it.

The OP already has a customer lined up and so I think they can be self employed as long as both parties are ok with this.

Sorry if that was misleading.

As per HMRC

"Where an agency supplies the services of a person that is not an employee of the agency to another person, it is possible that special rules may apply with the result that the agency has an obligation to operate PAYE and account for class 1a NICs."

So at Hex correctly pointed out, it's not law but most agencies will not operate with self-employed people.

**piede828** · 20 October 2010, 13:38

Worker's obligations (own employment status)
Your employment status for tax and NICs purposes will depend on the terms and conditions of your contract with the engager.

If you work under a contract of service (employment), the employer will be responsible for operating PAYE and accounting for tax and NICs.

However, if you work under a contract for services (self-employed), you will be responsible for registering as self-employed and for completing a Self Assessment.

You can obtain a HMRC 'view' of your employment status by using the Employment Status Indicator (ESI) tool. However, this will provide a general guide only which would not be binding on HMRC.

Top
Agency's obligations
Where an agency, usually a recruitment agency, supplies a worker who is not an employee of the agency, to another person, it is possible that special rules might apply with the result that the agency has an obligation to operate PAYE and account for Class 1 NICs.

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My work won't be supplied by another agency and so as self-employed I should be responsible for that.

**CheeseSlice** · 20 October 2010, 13:49

Originally posted by SallyPlanIT View Post

Sorry if that was misleading.

As per HMRC

"Where an agency supplies the services of a person that is not an employee of the agency to another person, it is possible that special rules may apply with the result that the agency has an obligation to operate PAYE and account for class 1a NICs."

So at Hex correctly pointed out, it's not law but most agencies will not operate with self-employed people.

I couldn't find that line of text in the link you provided.
The closest match is this one and mentions Class 1, not Class 1a NICs:

"Where an agency, usually a recruitment agency, supplies a worker who is not an employee of the agency, to another person, it is possible that special rules might apply with the result that the agency has an obligation to operate PAYE and account for Class 1 NICs."

As an accountant please quote your references accurately, and please don't immediately imply that something is not allowed by the HMRC or UK law. This is very misleading and has significant potential to influence a persons decision making, especially when coming from a recognised professional body. This forum allows you to edit your posts, so it may be a good idea to edit the one specifically about 'UK law' so that nobody takes it for granted.

**SallyPlanIT** · 20 October 2010, 13:49

Originally posted by piede828 View Post

Ok but why wouldn't they operate? I will be working with Italian agencies\companies. Does that apply to them too?

They won't because of the risk of them being liable for PAYE should you default.

You would need to check with your Italian agency or end client. Their legislation may be different.

You should be looking at what would be most suitable and cost effective for you personally before making a decision.

**SallyPlanIT** · 20 October 2010, 13:57

Originally posted by CheeseSlice View Post

As an accountant please quote your references accurately, and please don't immediately imply that something is not allowed by the HMRC or UK law. This is very misleading and has significant potential to influence a persons decision making, especially when coming from a recognised professional body. This forum allows you to edit your posts, so it may be a good idea to edit the one specifically about 'UK law' so that nobody takes it for granted.

My apologies, post edited.

Working in UK for Italian company