HMRC Tax Exempt Advise Needed (UK Contractor but living and working from abroad)

[dsfuksa]

Hi,

I have a contract with a UK company that allows me to work from abroad however, I still get paid in the UK even though residing abroad. Am I exempt from paying HMRC taxes?

Also, please advise on the below:
1. 2013/2014: Worked and lived in UK until December 2013 and now residing abroad since January 2014 with no return this Tax year.
- Will I be exempt for the period from January 2014 to Tax year end?
2. 2014/2015: I will be residing abroad and might be required to travel to the UK to support my client. To be except:
- How long altogether am I allowed to visit the UK in this Tax year to still be exempt?
- What is the maximum stay for any one given visit?
- How many visits are we allowed in a Tax year?

Many Thanks!!!

[ASB]

How are you getting paid ?
Are you on the clients payroll?
Are you invoicing ?
If so where is that company based?
Where is it incorporated?
Where are you currently resident?
Where are you domiciled?
Where are you normally resident?
Where do you own property?
Where are your partner/wife and children (if any)?
Did you fill out an R85 (I think that's the right form)?

The answers to these and many other questions will likely determine your status. It will affect whether UK expects taxes on UK source income, worldwide income, or potentially none.

However, any tax that you do pay in the UK will re offsetable in accordance with the DTA of your new country (if they don't have a DTA then it is simply down to the laws of your host country).

If you want to depress yourself you could look up the case of robert gaines cooper. THat may give some insight into factors that can be relevant.

[BlasterBates]

In your case it is quite complicated.

The fact that you will be returning and working to some extent in the UK means there are tax implications.

You may have to setup a UK Ltd and a Foreign company.

You need professional advice in the UK and where you're working, and if in doubt declare your income and claim exemption.

If you simply assume you are not taxable and you're wrong it will be cripplingly expensive.

Evading 10,000 punds unwittingly will cost you 50000.

[ASB]

"You may have to setup a UK Ltd and a Foreign company."

[pedant]

That could be the case if the foreign country has some rule that says "your class of company can't do overseas work".

However I am aware of nothing that would prevent a foreign company generally providing services for a UK company, or being unable to send it's employees. There are probably specific professions though.

Thus I think "you may have to ......" is overstating it. However I agree there are circumstances in which it may well be the prudent and pragmatic thing to do; but that is more related with what terms people will choose to do business on rather that matters of legality.

But, yes, It is complex, it is always down to individual circumstances, and get it wrong can be at best expensive, and in a number of regimes rapidly a serious criminal matter.

[BlasterBates]

If your business is taxable in the UK you need to register your business in the UK as well as in the home country and you need to keep two sets of accounts, i.e. two separate branches.

Effectively this means you need to run two companies though it is possible to have two different branches of the same company.

It very much depends on how much you work in the UK and in the other country.

i.e. it depends on whether your company is taxable in the UK as well as the home country.

If you were to spend 50% of your time in the UK and 50% in another country you would almost certainly need two branches one in your home country and the other in the UK.

You will have a main residency, which probably won't be the UK, in the UK you pay tax on all income you source in that country.

So you have two complex problems. registering and taxing a business, and taxing personal income.

Having worked across border for a number of years my view is that this is a problem I would simply try to avoid by not doing it.

Cross border taxation is a nightmare and although people shy away from the inevtiable heavy cost of admin by putting their head in the sand and hope one or the other country won't notice, it's too risky.

You need to bite the bullet and have two accountants and if the admin burden is too high, just go and get a simple contract in whichever country you want to live.

If there is just the occasional business visit to the UK it shouldn't be a problem to run this through a foreign company. If this entails several weeks or months in the UK then you need advice.

[ASB]

If there is just the occasional business visit to the UK it shouldn't be a problem to run this through a foreign company. If this entails several weeks or months in the UK then you need advice.

In terms of the visitation this **might** be relevant.

PAYE82000 - PAYE operation: international employments: EP appendix 4: criteria for short term business visitors

[BlasterBates]

In terms of the visitation this **might** be relevant.

PAYE82000 - PAYE operation: international employments: EP appendix 4: criteria for short term business visitors

That's good and as outlined in it, it emphasises contacting HMRC, which means after giving them the information they can then approve your business arrangement.

I think this is the key to avoid any nasty surprises.

Notice however that this is about seconding to a UK branch of an international employer.

If you have a company in a foreign country but not in the UK you obviously can't second yourself.

So you need to ask HMRC how this applies to someone who is self-employed. But I think the link is a good guide as to the length of stay that is acceptable and what conditions you need to fulfill.