Contracting in Norway/Australia

[Ninja1980]

Hi

I'm currently contracting in the UK oil and gas industry through my own limited company. In a couple of years I'm planning on taking an overseas assignment to either Norway or Australia. By this time, I should have a reasonable cash balance sitting in my company bank account. Now, as far as I can see, I've got two options:

1) Close the company and claim Entrepreneur's Relief and take the balance out as a capital gain.

2) Keep the company open and continue to take lower rate dividend while being taxed on my overseas earnings at source.

I understand that to establish the best option will indeed be quite complex. So if anyone has had any experience or could give me a contact to gain some advice, it would be very much appreciated.

[TykeMerc]

You've also got :-

3) Make the UK Ltd dormant and leave the cash there

If you think you will be working abroad for quite a while I'd probably do 1) though and if/when you come back working in the UK start a new Ltd.
There is a rumour that ESC16 will be withdrawn at some point in the near future so it's probably better to use it rather than delay.

[BarbarianAtTheDoor]

Excuse me for the following, this really is more of a question than anything else:

I'm considering something very similar. Question is why I can't establish (say) a branch of my UK ltd, and trade in that name? That way, the parent company should be able to sponsor me so that I can claim all the usual living expenses as a cost of the Oz co renting me from my UK co. I see those sort of arrangements being done by big consultancies all the time, my mom used to be on a similar setup.

What is wrong with this idea? Any legal reason why I'm not allowed to do this?

[eek]

Excuse me for the following, this really is more of a question than anything else:

I'm considering something very similar. Question is why I can't establish (say) a branch of my UK ltd, and trade in that name? That way, the parent company should be able to sponsor me so that I can claim all the usual living expenses as a cost of the Oz co renting me from my UK co. I see those sort of arrangements being done by big consultancies all the time, my mom used to be on a similar setup.

What is wrong with this idea? Any legal reason why I'm not allowed to do this?

I think the problem will be the cost of getting professionals to set it up and configure it in a tax efficient manner. Being a one off non standard request it may be that the costs for doing the legal bits on a 1 off basis is far higher than the actual amount of money saved.

[BarbarianAtTheDoor]

Thanks for that, never even dawned on me that that might be a problem, so the question from here on would be what's the difference between that and my UK co. owning an OZ ltd co? If I were to buy a simple IT consulting firm in the Oz, that shouldn't make much of a difference in legal terms and should still give me the same sort of freedom as the branch thingy. I could no longer be the director of my UK company, but I suppose I could still be the sole shareholder.

I'm desperate to find a solution for this, I think I will eventually have to get professional advice around this.

[Mister Clark]

Something to bear in mind when considering contracting in Oz:

80/20 Rule explained | Australia | Contractor Taxation

I run a Ltd and obviously would'nt want to pay those levels of tax but HMR&C should take a leaf out of their book when drafting tax legislation with regards to how easy (or not) it is to interpret.

[BarbarianAtTheDoor]

Right, thanks, so my only chance is to be allowed to invoice the client in Oz through my UK ltd? That should remove all those legal obstacles and allow me to claim living expenses while in Sydney. Question is, would a big institution like an IB or HF allow for something like this, with clearances and whatnot?

[Mister Clark]

No idea about contracting in Oz via a UK Ltd but this is something to bear in mind:

Living Away From Home Allowance | Australia | Contractor Taxation

Not sure if you have been to Oz accommodation isn’t cheap and you cant buy unless you are resident. Also if you are over 30 or want to work for more than 6 month I think you need to be sponsored else you could go on a holiday visa which I believe lets you work for 6 months out of 12.

Gut feeling is working via UK ltd is a no go, would be interested in the outcome however as I'm thinking of doing the off and leaving the UK for a couple of years myself.

[BarbarianAtTheDoor]

Called the accountant, asked the same question, immediately said no, kept asking, said "yes, well...you're right, you should, let me get back to you on that".

Temporary Business (Long Stay) - Standard Business Sponsorship (Subclass 457)

What this says is that an overseas business can sponsor these visas.

If you are an employer with a business that has no formal operating base or representation in Australia, you may apply to bring employees to Australia to do one of the following:

establish a business operation in Australia fulfil obligations for a contract or other business activity in Australia.

Note: Overseas Business Sponsors do not need to be operating in Australia but may need to meet other employer eligibility requirements.

This clearly says that this should be fine, as long as I'm no longer the director of my UK company, and as long as the Oz client is willing to do direct business with the UK ltd, in which case the 80/20 rule shouldn't apply either, since the company is out of Oz's jurisdiction.

But IANAL, so I could easily be missing something.

[Mister Clark]

That is interesting.

If you decide to pursue this please let me know the outcome; I'm leaving this hole next year for sure to work in Oz and had come to terms with going permie but if I could continue using my Ltd that really would be the icing on the cake.