Six months contracting in a year - Implications

[mongle]

Hi,

I am considering contracting for only 6 months in the year for the next year or two. I will be spending 6-7 months in the UK and the rest outside. I contract via the Ltd route. What are the accounting, tax, Company House implications, if any. Thanks..

[Clare@InTouch]

The accounting and tax implications are the usual for running a limited company - filing accounts, a tax return, PAYE returns, VAT returns etc. if applicable.

The wider tax implications will depend on whether or not you're UK resident and/or domiciled. That's not such a quick question to answer, and you may be better off giving an accountant a call to go through the full situation with them. You should also get tax advice in the country you'll be working in as a UK accountant is unlikely to know the tax rules of that other country, and there may be implications on that side too.

[northernladuk]

There is a cut off where it isn't worth opening a LTD and it's better going brolly. The consensus seems to be about 30k. Might be worth doing that just to avoid headaches.

EDIT : Saying that looking at your posting history you are already with Nixon Williams. Why not ask them?

[Eirikur]

The implication I see is the 6 months gap in your CV every year, which you will have to explain over and over again

[mongle]

The accounting and tax implications are the usual for running a limited company - filing accounts, a tax return, PAYE returns, VAT returns etc. if applicable.

The wider tax implications will depend on whether or not you're UK resident and/or domiciled. That's not such a quick question to answer, and you may be better off giving an accountant a call to go through the full situation with them. You should also get tax advice in the country you'll be working in as a UK accountant is unlikely to know the tax rules of that other country, and there may be implications on that side too.

Thanks Clare. Good to know that its BAU as far as running the Ltd goes. I wont be claiming any expenses or salary during the break but i presume i can declare dividends from retained cash during that time..

Thanks for the pointer about residence and domicile. I checked HMRC site and as per that:
1. I will be resident based on the new SRT rule as i will be in the UK for more than 183 days.
2. Domicile is not relevant as i will not have any foreign earnings during the break. I will be just taking 5 months off to pursue other interests and charity work..

There is a cut off where it isn't worth opening a LTD and it's better going brolly. The consensus seems to be about 30k. Might be worth doing that just to avoid headaches.

EDIT : Saying that looking at your posting history you are already with Nixon Williams. Why not ask them?

I already operate my Ltd and i hope to bill atleast 40k in the 6 months. But brolly is certainly an idea i will keep in mind.. will check with NW anyway once they are back from holidays.. just wanted to see what comes from the wisdom of the forum

The implication I see is the 6 months gap in your CV every year, which you will have to explain over and over again

Yes, i realise this could be an issue but i will cross that bridge when i come to it..

[No2politics]

You also need to check with the country you are escaping to for 184 days of the year. Many countries around the world have tax treaties with the UK that mean you still might not escape the reach of HMRC. The way they like it to work is that you pay the higher amount of tax between the two countries. With they being the HMRC and the other countries equivalent.

I'm not saying it works out that way, but you will need some professional advice. Be aware in some countries, like Germany the tax people rockup mob handed with the police and really do take a very dim view on evasion.

The op is not working abroad, so will not have to pay tax. HTH

[ASB]

The op is not working abroad, so will not have to pay tax. HTH

Being picky that is not necessarily true. The amount of time they spend in the overseas country could be enough to get them resident. That country could seek to tax their worldwide income depending upon their tax laws.

you dont have to work somewhere to be tax resident there. Also you can be tax resident in more than one place simultaneously.

[Boo]

The implication I see is the 6 months gap in your CV every year, which you will have to explain over and over again

No he won't.

Boo

[cojak]

Six months contracting in a year - Implications

No he won't.

Boo

I had to provide a personal reference for my current contract as I was out more than 28 days from the last contract.

(The client is big but rather anal over this type of thing...)

[Eirikur]

I had to provide a personal reference for my current contract as I was out more than 28 days from the last contract.

(The client is big but rather anal over this type of thing...)

Yes exactly the same here. (client of my client is in finance) Personal references had to confirm each gap of more then 4 weeks in the last 5 years alternatively I could show them my private bankaccount details,which I refused.