How can I contract in London through my (foreign) limited company?

[Steve Griswald]

Hi everyone,

I want to contract in London for 6 months for some international experience. I'm based in Switzerland and I have a limited company which I use to contract to the big Swiss banks. I need to work through my Swiss company so I can write off my London expenses.

I know its perfectly legal to do this, but I also know agencies don't care and won't entertain the idea of dealing with a foreign company.

How can I accomplish this? With such a short term contract it doesn't make sense for me to establish a UK subsidiary. Are there (trustworthy) UK companies who would be a middleman for a small fee and then pay out to my Swiss company? If so, can anyone provide some names? I'm looking to totally avoid the UK government bureaucracy as I will pay myself in Switzerland and thus handle all social/tax issues in a Swiss context.

Thanks in advance
Steve

[Euro-commuter]

Hi everyone,

I want to contract in London for 6 months for some international experience. I'm based in Switzerland and I have a limited company which I use to contract to the big Swiss banks. I need to work through my Swiss company so I can write off my London expenses.

I know its perfectly legal to do this, but I also know agencies don't care and won't entertain the idea of dealing with a foreign company.

How can I accomplish this? ...

Long way round: start up a UK company. Have it pay your Swiss company.

Short way: get the contract first. Then tell the agency that you work through a Swiss company, not a UK company. Their sympathy towards this detail will be encouraged by the fact that they can already smell the money.

[darmstadt]

I don't actually have a GmbH here in Germany but occasionally contract to UK companies in the UK (and elsewhere.) I just send them an invoice with no VAT and then declare the invoice here in Germany to the Finanzamt along with expenses, etc. Works perfectly fine.

[torero]

I keep wondering whether contracting in the UK through an overseas limited company can help to avoid any headache with IR35?

[SimonMac]

I keep wondering whether contracting in the UK through an overseas limited company can help to avoid any headache with IR35?

Any lack of IR35 headaches will be mitigated with any double tax headaches

[BlasterBates]

If you are working in London i.e. you travel and work in London, then you should operate and tax your company in the UK, even just for 6 months.

Using offshore entities to do UK business will probably not be tolerated, and agencies will refuse to deal with you.

In any case it's not worth the risk. The Swiss certainly wouldn't tolerate you using a UK Ltd company in Switzerland other than in exceptional circumstance.

If you are working for a Swiss bank and they "second" you to the UK branch but you are billing (via an agency) the Swiss branch then using your Swiss co. would be OK.

Just because you tax your earnings in the UK doesn't necessarily mean you can't claim expenses from Switzerland.

[torero]

Any lack of IR35 headaches will be mitigated with any double tax headaches

Have you heard of international double taxation agreements?

[torero]

If you are working in London i.e. you travel and work in London, then you should operate and tax your company in the UK, even just for 6 months.

Can you share a link on law saying that?

I saw a consultancy registered in Netherlands working in UK. One more example is a software company working in Germany and being registered in Luxembourg. And another one working in the UK and headquartered in Luxembourg.

[NotAllThere]

I keep wondering whether contracting in the UK through an overseas limited company can help to avoid any headache with IR35?

If your contract is short enough that you (personally) don't become tax resident here, then yes. Otherwise no.
For the OP, there are two things to consider.
1. Your tax residency
2. Your company's tax residency.

AIUI and INAITA (I am not an international tax accountant), though I live in Switzerland as well:
1. Exceed the days and you'll be liable to pay tax in the UK on global earnings. Since there's a double tax agreement between CH and UK, any UK tax will be offset against your CH tax bill.
2. Any profit generated in the UK is taxable in the UK.

The issue agencies have is that if your company doesn't pay the tax due, they'll be liable. Therefore you'll find it difficult to persuade them. To the point that they'll let the contract fail rather than engage your company.

There are two solutions, I think.
1. Find a UK company that you can work through (create your own)
2. Work through a brolly.

Maybe an international tax accountant would advise you differently.

[BlasterBates]

Can you share a link on law saying that?

I saw a consultancy registered in Netherlands working in UK. One more example is a software company working in Germany and being registered in Luxembourg. And another one working in the UK and headquartered in Luxembourg.

Capital Consulting - Why can’t I continue paying taxes through my Limited company?

The 183-day rule does not apply in situations where a one man Limited company is the employer. As soon as the director of the company moves, the permanent establishment of the company moves with him. Contractors operating through UK Limited companies outside the UK are consequently running the risk of being liable not only for unpaid personal income tax, but also for corporate tax, having created a permanent establishment in the country where they are working.

This is not to say you can't do it, but you run a risk, so why bother. The six month rule is only one of many criteria used to determine whether your income is taxable.

We have had contractors posting here who were charged with tax evasion for using their Ltd's for less than 6 months in Germany, so the risk is not simply theoretical.

I would recommend you set up a UK Ltd company and tax it in the UK for the time you are contracting. Don't try and save a few quid and run the risk of tax evasion.