Hi All,
I have a query which i hope someone can help me with. Before i start, this situation applies to about 6 or 7 of us working in exactly the same situation.
I work in the UK for my limited company.
Over a year ago I took a contract in the UK.
The contract is through an agency and they engage my limited company to work for a systems integrator.
As part of the project, i was asked by the systems integrator to commission the project in South Korea.
As the systems integrator had strict ethical policies, they would only send engineers to South Korea on Business Visas.
The agency that employs my limited company told me that because I was working on Business Visa's in South Korea, I was visible to the Korean tax authorities and therefore liable to pay personal Korean tax at source. They have therefore deducted 20% from the amount my limited company invoices and used it to pay the Korean personal tax directly.
Their justification for this is that because i am visible, if i dont pay the tax then they could face my liability from the Korean authorities if I didn’t pay it, furthermore if they didnt pay the tax liability then this liability could be passed further up to the systems integrator. The bottom line is no-one would accept that responsibility so they decided to take it out of my limited company income at source.
Their response on the recovery of the Korean tax is that we will receive tax notes from the Korean authorities at the end of the Korean tax year which can then be offset against our personal tax. This obviously causes a massive problem because the tax I pay on my personal salary will nowhere near recoup the amount I will have paid in Korea. Therefore the personal tax I am being forced to pay is effectively dead money.
I have a number of questions about this and i wondered if anyone can offer any help or advice.
1) The agency have basically forced me to pay personal Korean tax. However, contractually, they have only engaged my limited company. Is this legal? There is nothing in the contract T’s and C’s between the agency and my limited company about this.
2) As the agency are being seen to deduct personal tax at source, does this open me up to IR35 implications because they are handling some of my personal tax issues?
3) Despite my major concern about the legality of this situation, I have a query about the percentage being deducted. The agency have taken 20% off my invoices at source but we have found Korean documentation stating that the fixed rate should be 15%. Does anybody have any idea which rate is correct because I have a feeling the agency have taken an additional amount to cover themselves.
4) I really can’t see the way this taxation issue has been handled is correct. Does anyone know anywhere where I can get good legal advice about this so I can pursue it further if I wish to pursue this.
Many Thanks in advance of your posts
Steve
I have a query which i hope someone can help me with. Before i start, this situation applies to about 6 or 7 of us working in exactly the same situation.
I work in the UK for my limited company.
Over a year ago I took a contract in the UK.
The contract is through an agency and they engage my limited company to work for a systems integrator.
As part of the project, i was asked by the systems integrator to commission the project in South Korea.
As the systems integrator had strict ethical policies, they would only send engineers to South Korea on Business Visas.
The agency that employs my limited company told me that because I was working on Business Visa's in South Korea, I was visible to the Korean tax authorities and therefore liable to pay personal Korean tax at source. They have therefore deducted 20% from the amount my limited company invoices and used it to pay the Korean personal tax directly.
Their justification for this is that because i am visible, if i dont pay the tax then they could face my liability from the Korean authorities if I didn’t pay it, furthermore if they didnt pay the tax liability then this liability could be passed further up to the systems integrator. The bottom line is no-one would accept that responsibility so they decided to take it out of my limited company income at source.
Their response on the recovery of the Korean tax is that we will receive tax notes from the Korean authorities at the end of the Korean tax year which can then be offset against our personal tax. This obviously causes a massive problem because the tax I pay on my personal salary will nowhere near recoup the amount I will have paid in Korea. Therefore the personal tax I am being forced to pay is effectively dead money.
I have a number of questions about this and i wondered if anyone can offer any help or advice.
1) The agency have basically forced me to pay personal Korean tax. However, contractually, they have only engaged my limited company. Is this legal? There is nothing in the contract T’s and C’s between the agency and my limited company about this.
2) As the agency are being seen to deduct personal tax at source, does this open me up to IR35 implications because they are handling some of my personal tax issues?
3) Despite my major concern about the legality of this situation, I have a query about the percentage being deducted. The agency have taken 20% off my invoices at source but we have found Korean documentation stating that the fixed rate should be 15%. Does anybody have any idea which rate is correct because I have a feeling the agency have taken an additional amount to cover themselves.
4) I really can’t see the way this taxation issue has been handled is correct. Does anyone know anywhere where I can get good legal advice about this so I can pursue it further if I wish to pursue this.
Many Thanks in advance of your posts
Steve
