Outsourcing, can I join in?

[testlad]

A friend has secured a 3 month contract in the UK but has no UK ltd company. He will not stay in the UK after the 3 months. He has his own company outside the UK.
I know he can use an umbrella, but could he use my ltd co, if I effectivley 'outsourced' the work to him?
My ltd would sign the contract and raise the invoices to the agency, he would then raise an invoice to my ltd and I'd pay him. He'd be happy for me to take a small margin to justify the deal.
Just sounds too easy, I guess there must be some good reason not to?

[mailmannz]

Yes...you would then sign your friend as the resource and provide that to the client. This is of course assuming your friend is legally capable of working in Blighty?

Mailman

[testlad]

Yes, he is a uk citizen who has been living abroad for last few years.
From his point of view I guess if the contract went on for longer he would start to become liable for UK income tax, but only if he brings the money into the UK?

[tim123]

As a UK citizen he is presumably UK domicle. The (non) remittance rule does not apply. In any case this is UK sourced income and the revenue are allowed to consider that they are entitled to a share of it.

So, if you employ this person on an 'invoiced' basis and they later show that he should have been an employee paying UK tax YOU will get the bill. This is why you shouldn't do it (and why agencies won't either)

IMO if you aren't going to employ this person PAYE deducting the correct Tax and NI at source, you shouldn't touch it with a barge pole.

Just my 2p worth

tim

[testlad]

But, I'd not be 'employing' him I'd be contracting his company to supply the consultant. He is then placed by his company.
If the fees are paid by my company to his company (outside the uk), surely he has not received a UK income. Unless he actually brings the money back into the UK?

[mailmannz]

The resource isnt an employee of testlads company and is being contracted in to provide the required skills and experience.

In the eyes of AtW, this chap would be a tax cheat. :rollin

Mailman

[tim123]

Re: I'd be contracting his company

You said in the initial post that he didn't have a company.

tim

[testlad]

Re: I'd be contracting his company

What I said was he doesn't have a UK company. He has a non EU company.
My understanding is that agencies won't let you use a non UK company?

[tim123]

Re: I'd be contracting his company

But what sort of overseas company?

An incorporated one or simply "Trading As". The latter is self employment and the revenue are entitled to unpick the arrangement if they think that the terms of employment are not those that represent Self Employment.

I think that this is a minefield that you should avoid walking into for the small amount of benefit it will give you.

My second 2p worth, but it's your call.

tim