US Customer, Ltd Contractor, Working from the UK

[WW1]

I've been asked about my availability for engineering design work when my current contract finishes. The potential customer is a company in the US although they have places in the UK, Europe and Asia too.

The work will be done solely from the UK through my limited company which is VAT-registered.

I have some basic beginner's questions:
1. How is VAT treated for contracts like this - do I charge VAT or not for a US client?
2. Is tax paid solely in this country, or does the US Treasury also want a slice of my cake?
3. Does the fact that the customer is a US company make any difference to IR35?

Has anyone here worked via their Ltd company for a US customer which has a presence in the UK (I think that the UK location is the company headquarters).

Do the answers to the questions above depend on where the customer is, or do they apply to all foreign clients?

[Lance]

I've been asked about my availability for engineering design work when my current contract finishes. The potential customer is a company in the US although they have places in the UK, Europe and Asia too.

The work will be done solely from the UK through my limited company which is VAT-registered.

I have some basic beginner's questions:
1. How is VAT treated for contracts like this - do I charge VAT or not for a US client?
2. Is tax paid solely in this country, or does the US Treasury also want a slice of my cake?
3. Does the fact that the customer is a US company make any difference to IR35?

Has anyone here worked via their Ltd company for a US customer which has a presence in the UK (I think that the UK location is the company headquarters).

Do the answers to the questions above depend on where the customer is, or do they apply to all foreign clients?

1. ask your accountant
2. UK I believe
3. As the client has a UK presence, they make the determination on whether IR35 applies or not. Save yourself a lot of effort and try to get the contract through the UK HQ and under UK jurisdiction. That would be a lot simpler and avoid you having to think about the other complex aspects you've not even considered (liability, indemnity, insurance)

Do a search on other threads here, as this is asked, in various forms, quite often.

[WTFH]

Yes, I've done work for US companies through my UK Ltd.
The easiest way to do it is to get the contract from their UK presence.

1. I would expect you to charge VAT, but speak to your accountant
2. Generally tax will be paid just in the UK, unless your company is making money in the US, then no tax is due in the US.
3. Client has UK presence, client makes IR35 determination

[jamesbrown]

Regarding VAT, it depends on the place of supply rules, but it is almost certainly a B2B supply where the place of supply is the US and hence outside of the scope of UK VAT. You would note this in every invoice and not charge VAT.

Regarding US taxes, this should be non-US source income of a non-US person (company) and hence no withholding. This assumes all work is done in the UK but, in any case, you’d need an employment visa or GC or US citizenship otherwise. The client may ask you to complete an IRS form W-8BEN-E for their records.

Regarding IR35, if the US client has a UK presence, then they will be nominally responsible for an SDS and the UK branch or PE liable until April 5 2023, assuming the revocation of Chapter 10 goes as planned (I wouldn’t bank on it given current volatility in the UK). In reality, the client won’t have a clue and will probably be quite skeptical, so you’ll need to convince them.

Get a Wise account for fx if you’re going to be paid in USD.

Get PI insurance for US jurisdiction and/or governing law if the contract is written for a US state.

[oliverson]

I've been asked about my availability for engineering design work when my current contract finishes. The potential customer is a company in the US although they have places in the UK, Europe and Asia too.

The work will be done solely from the UK through my limited company which is VAT-registered.

I have some basic beginner's questions:
1. How is VAT treated for contracts like this - do I charge VAT or not for a US client?
2. Is tax paid solely in this country, or does the US Treasury also want a slice of my cake?
3. Does the fact that the customer is a US company make any difference to IR35?

Has anyone here worked via their Ltd company for a US customer which has a presence in the UK (I think that the UK location is the company headquarters).

Do the answers to the questions above depend on where the customer is, or do they apply to all foreign clients?

I'm doing this currently.

1. No VAT should be charged
2. Tax is UK-only if you're. doing the work in the UK
3. For me, the client has no physical premises here in the UK and so the IR35 reform rules don't apply. Therefore it's down to me to make the determination.

Additionally, I invoice in USD and receive payment in USD, which is very fortunate given the strength of that currency relative to GBP.

[Andy Hallett]

The other thing, check your insurance. Most policies will exclude liability for US and Canada and it will even invalidate some policies.

[oliverson]

One other thing is that you if you planned on a new mortgage deal, having a non-UK client severely restricts your choice (if there is any currently) of lenders. Luckily I was able to switch to a better deal with my current lender.

[Lance]

One other thing is that you if you planned on a new mortgage deal, having a non-UK client severely restricts your choice (if there is any currently) of lenders. Luckily I was able to switch to a better deal with my current lender.

why????
I've never had a lender ask me about my clients. Why would they? They're interested in P&L, signed off accounts and personal finances.

That includes COOP, Barclays, Halifax, and YBS. Not exactly specialist lenders.

[jamesbrown]

why????
I've never had a lender ask me about my clients. Why would they? They're interested in P&L, signed off accounts and personal finances.

That includes COOP, Barclays, Halifax, and YBS. Not exactly specialist lenders.

oliverson is absolutely right. You can get a loan based on profits, for example, but there are very few UK lenders that will consider a mortgage based on day rate in a non-GBP currency (last time I checked, there was literally one). They are only interested in P&L for a mortgage based on P&L, which is a small subset of the overall contractor mortgage market.

[jamesbrown]

Also, it's pretty obvious why they do this. Consider the downward spiral of Cable recently. That can happen in the other direction too and they end up having completely mispriced affordability/risk.