Reply to: Family member as additional director

[NowPermOutsideUK]

No necessarily. DTA between the UK and Poland:

except as provided in sub-paragraph (a) of this paragraph, may also be
taxed in the Contracting State of which the company paying the dividends
is a resident and according to the laws of that State, but if the beneficial
owner of the dividends is a resident of the other Contracting State, the tax
so charged shall not exceed 10 per cent of the gross amount of the
dividends.


And at the moment I really don't know how my dividends should be taxed...is it just tax in my resident country? Or 10% for HMRC also...

If you are out of Uk non resident there is no dividend tax to pay to hmrc. I think but I’m not sure about the five year rule for divis. It definitely applies to proprietary cgt (the five year rule). However as I will be out of Uk for five years it does not make a difference to me

You need to pay whatever your local income tax is to the country you are in yes

[ContractorPL]

Also worth pointing out that dividends from your uk ltd IS TAX FREE if non uk tax resident meaning if you move away rom UK you can declare a dividend with no further UK tax to pay - Of course local tax might charge something but the point is that the Uk does not

That means as above name "profit - 19% corp tax" is total payable which makes UK low tax place in such an environment

No necessarily. DTA between the UK and Poland:

except as provided in sub-paragraph (a) of this paragraph, may also be
taxed in the Contracting State of which the company paying the dividends
is a resident and according to the laws of that State, but if the beneficial
owner of the dividends is a resident of the other Contracting State, the tax
so charged shall not exceed 10 per cent of the gross amount of the
dividends.


And at the moment I really don't know how my dividends should be taxed...is it just tax in my resident country? Or 10% for HMRC also...

[zerosum]

Also worth pointing out that dividends from your uk ltd IS TAX FREE if non uk tax resident meaning if you move away rom UK you can declare a dividend with no further UK tax to pay - Of course local tax might charge something but the point is that the Uk does not

That means as above name "profit - 19% corp tax" is total payable which makes UK low tax place in such an environment

As long as you don’t try and move back within 5 UK tax years, yes.

[NowPermOutsideUK]

Also worth pointing out that dividends from your uk ltd IS TAX FREE if non uk tax resident meaning if you move away rom UK you can declare a dividend with no further UK tax to pay - Of course local tax might charge something but the point is that the Uk does not

That means as above name "profit - 19% corp tax" is total payable which makes UK low tax place in such an environment

[win10]

My concern would be a fundamental one - if you are expecting to get work from agents how will that work come April when a lot of things will be inside IR35?

My current client's stance before April 2020 was: No UK LTDs permitted if any worker is UK tax resident.
If the worker is not UK tax resident (lives outside UK) then UK LTD will be permitted (as well as any other EU LTD) and = b2b engagement.

In contrast any worker employed by their EU LTD, but living in UK will not be permitted (and the EU LTD as well).

This came from their legal department so I consider it solid.

RE: director's location: the rules might be very complex, but if the end result is that the proper amount of tax is paid to the HMRC it is highly unlikely HMRC will investigate. With someone living out of UK the most simple case will be total turnover = profit @ 19% tax.

[WTFH]

Correct. Or an EU citizen in the UK, as the whole point is the reciprocity of the arrangement.

Correct. It's about where you are resident. No freedom of movement between the two.

[zerosum]

The WA only applies if you are resident in an EU country by 31st December 2020, i.e. in 42 days.
If you're not, then the WA doesn't apply.

Correct. Or an EU citizen in the UK, as the whole point is the reciprocity of the arrangement.

[WTFH]

Nope. If you're referring to the internal market bill it doesn't affect citizens' rights.

Citizens' rights feel reasonably secure on the basis that it would be mutually assured destruction.

The WA only applies if you are resident in an EU country by 31st December 2020, i.e. in 42 days.
If you're not, then the WA doesn't apply.

[zerosum]

2. Competence. The new director might mess things up on accounts, reporting, etc., and you end up with lots of problems.

Presumably this risk can be mitigated by having them do the bare minimum possible, and the accountant taking most of the slack?

[zerosum]

you are joking? Aren't you?

Nope. If you're referring to the internal market bill it doesn't affect citizens' rights.

Citizens' rights feel reasonably secure on the basis that it would be mutually assured destruction.

[Lance]

It's a reasonable concern.

I'd say it's a trade-off. For those roles which are deemed outside IR35, the fact that I am abroad bolsters the case.

It will be easier to work and trade in Europe (i.e. with an AbroadCo). Over the years I'd say my contracts were about 30% from this quarter so it might be necessary to expand that.

Overall, there seems more optionality in going this route and being protected by the Withdrawal Agreement and then changing my mind if necessary and moving back, compared with the many hoops one has to jump through to get residency and a work permit as a third country national (verging on the impossible in many cases). Brexit incinerated the good options, it's a choice of which kind of sh*t to eat at this point.

you are joking? Aren't you?

[zerosum]

My concern would be a fundamental one - if you are expecting to get work from agents how will that work come April when a lot of things will be inside IR35?

It's a reasonable concern.

I'd say it's a trade-off. For those roles which are deemed outside IR35, the fact that I am abroad bolsters the case.

It will be easier to work and trade in Europe (i.e. with an AbroadCo). Over the years I'd say my contracts were about 30% from this quarter so it might be necessary to expand that.

Overall, there seems more optionality in going this route and being protected by the Withdrawal Agreement and then changing my mind if necessary and moving back, compared with the many hoops one has to jump through to get residency and a work permit as a third country national (verging on the impossible in many cases). Brexit incinerated the good options, it's a choice of which kind of sh*t to eat at this point.

[eek]

My concern would be a fundamental one - if you are expecting to get work from agents how will that work come April when a lot of things will be inside IR35?

[zerosum]

Their is a who sub-form for people who took international tax specialist advise might be worth having a look:

https://www.contractoruk.com/forums/...eme-enquiries/

Doesn't this rather ignore the fact that the effect of the advice is to pay HMRC more tax than would otherwise be the case? Issues are more likely to come from abroad if anything.

[BlueSharp]

Nice try, but again, this is paid advice from an international tax specialist with experience of winning cases.

He advised that I should have an additional director in the UK, and ensure that all management and control occurs in the UK, including flying in for board meetings, and that recent cases have been won on this.

He did not advise on all the ins and outs and implications of hiring such directors.

Back at you.

Their is a who sub-form for people who took international tax specialist advise might be worth having a look:

https://www.contractoruk.com/forums/...eme-enquiries/