Reply to: Non Resident In UK But On UK Payroll

[ComplianceLady]

Thanks for your comment. I agree with others that the OP is a perm and I'm contract, so my comment wasn't entirely relevant. However, I'm interested in what you said about establishment rules and will look into it, but isn't it the case that if I am a separate legal entity and can clearly show I'm outside IR35. (e.g. I have other clients) that this risk is very low? I mean what do you have to do for HMRC to recognise it's a true B2B transaction?

IR35 isn't the risk I was talking about. As I understand it you are not a UK tax resident and are not delivering work from the UK so IR35 doesn't apply. But your client's are paying a UK entity for work, that entity is then billing a separate legal entity in a different country for work that you, as an employee, are doing in a different country. The client thinks they're paying a UK company for work but that company is sub-contracting the work abroad. The risks are many if something is not done properly - insurance, VAT, personal tax, corporate tax, deemed employment... the issue is the client thinks they're safe because they're paying you through a UK company. I would imagine they'll have a contract - it's unlikely this arrangement is known to them and so probably breaches the contract.

[ComplianceLady]

A quick check told me that ComplianceLady has only posted 2 pro FCSA posts between March 15th and today (so I was generously given her the benefit of the doubt given that she hadn't even read the OPs initial post).

Sorry I haven't a clue what you're referring to?

[eek]

Thanks for your comment. I agree with others that the OP is a perm and I'm contract, so my comment wasn't entirely relevant. However, I'm interested in what you said about establishment rules and will look into it, but isn't it the case that if I am a separate legal entity and can clearly show I'm outside IR35. (e.g. I have other clients) that this risk is very low? I mean what do you have to do for HMRC to recognise it's a true B2B transaction?

IR35 works on a contract by contract basis and as of April the status is dependent on the end client's viewpoint - you having other clients is not and never has been a valid IR35 factor.

[fridgemagnet1776]

This is a risk for you and the client. Client thinks they're mitigating the risk but they're not. It would be much cleaner to do what we do - have a compliance process for the country (we have one for every country in Europe and some in Asia.) There's 2 specific risks for the client - one is personal taxation - if you aren't paying the correct tax they could be liable and 2nd is establishment rules - some regions having someone do work for you in that country creates a place of establishment for the client.

The world has changed - remote is much more palateable for clients but they are also starting to see that there is more to it than having a laptop and working where you want. There was a good article recently (that I can't find now!) about 3 workers working remotely from different countries and the relative difference in overall tax. Clients are starting to see this and if you want to make it work, in my view, you need to be able to present a much more compliant mechanism (I would say that!)

Thanks for your comment. I agree with others that the OP is a perm and I'm contract, so my comment wasn't entirely relevant. However, I'm interested in what you said about establishment rules and will look into it, but isn't it the case that if I am a separate legal entity and can clearly show I'm outside IR35. (e.g. I have other clients) that this risk is very low? I mean what do you have to do for HMRC to recognise it's a true B2B transaction?

[jamesbrown]

Yeah, I'm just pulling your leg, given the OP's infinity posts about their BTLs.

[eek]

To be fair, I think everyone and their dog knows the OP's background because they keep banging on about it in every possible context.

A quick check told me that ComplianceLady has only posted 2 pro FCSA posts between March 15th and today (so I was generously given her the benefit of the doubt given that she hadn't even read the OPs initial post).

[jamesbrown]

which is background I will accept you may not know

To be fair, I think everyone and their dog knows the OP's background because they keep banging on about it in every possible context.

[NowPermOutsideUK]

Sadly eek is correct - There is no chance to do contract work which might have worked if outside IR35 - As a perm I am in a corner and have to pay UK tax - I ve checked this back to front

[eek]

This is not true. The world has changed and no one on this forum seems to recognise it. I have done multiple interviews in the past week and explicitly told people I'm not in the UK. I'm British but not tax resident in the UK. Nevertheless they (UK ltd companies) want me to do contract and perm work for them. Just to be clear I will never personally go in to their office, all the work is completely remote.

Given all of the above are true, here is what I'm doing - not sure if it is correct but putting it out here for comment:

1. I have two ltd companies, one in UK and one in country of residence.
2. I am employee of foreign company but also shareholder and director of UK company.
3. UK company receives contract payments in a UK bank account
4. UK company pays foreign company for work I have done by sending money abroad
5. Foreign company pays corporation tax and employee taxes (mine) in country of residence.
6. UK company breaks even and has no expenses other than foreign co payments and bank account fees.

The only reason I have the UK company is because no one wants to send contract payments to a foreign company or foreign bank account, and no one seems to want to open a UK bank account for a foreign company. I'm basically just running a foreign company and paying tax locally.

If anyone knows a better way to deal with this please tell me.

How does all that work when he is an employee of a UK company placed on UK payroll not as an external supplier paid via a business to business UK transaction. For background this OP is also trying to minimise UK tax for other reasons as well (which is background I will accept you may not know). And the employer has already stated in the OPs first paragraph that "the HR team who have said that they cannot do contract work".

I know how to correctly sort out offshore work - some of my suppliers work the way you do but go and read the OPs original post and then correct mine once you understand the EXACT circumstances I was dealing with.

[ComplianceLady]

This is not true. The world has changed and no one on this forum seems to recognise it. I have done multiple interviews in the past week and explicitly told people I'm not in the UK. I'm British but not tax resident in the UK. Nevertheless they (UK ltd companies) want me to do contract and perm work for them. Just to be clear I will never personally go in to their office, all the work is completely remote.

Given all of the above are true, here is what I'm doing - not sure if it is correct but putting it out here for comment:

1. I have two ltd companies, one in UK and one in country of residence.
2. I am employee of foreign company but also shareholder and director of UK company.
3. UK company receives contract payments in a UK bank account
4. UK company pays foreign company for work I have done by sending money abroad
5. Foreign company pays corporation tax and employee taxes (mine) in country of residence.
6. UK company breaks even and has no expenses other than foreign co payments and bank account fees.

The only reason I have the UK company is because no one wants to send contract payments to a foreign company or foreign bank account, and no one seems to want to open a UK bank account for a foreign company. I'm basically just running a foreign company and paying tax locally.

If anyone knows a better way to deal with this please tell me.

This is a risk for you and the client. Client thinks they're mitigating the risk but they're not. It would be much cleaner to do what we do - have a compliance process for the country (we have one for every country in Europe and some in Asia.) There's 2 specific risks for the client - one is personal taxation - if you aren't paying the correct tax they could be liable and 2nd is establishment rules - some regions having someone do work for you in that country creates a place of establishment for the client.

The world has changed - remote is much more palateable for clients but they are also starting to see that there is more to it than having a laptop and working where you want. There was a good article recently (that I can't find now!) about 3 workers working remotely from different countries and the relative difference in overall tax. Clients are starting to see this and if you want to make it work, in my view, you need to be able to present a much more compliant mechanism (I would say that!)

[fridgemagnet1776]

First question - does the client know you aren't going to be in the UK.

Once they discover that fact they probably won't be interested

This is not true. The world has changed and no one on this forum seems to recognise it. I have done multiple interviews in the past week and explicitly told people I'm not in the UK. I'm British but not tax resident in the UK. Nevertheless they (UK ltd companies) want me to do contract and perm work for them. Just to be clear I will never personally go in to their office, all the work is completely remote.

Given all of the above are true, here is what I'm doing - not sure if it is correct but putting it out here for comment:

1. I have two ltd companies, one in UK and one in country of residence.
2. I am employee of foreign company but also shareholder and director of UK company.
3. UK company receives contract payments in a UK bank account
4. UK company pays foreign company for work I have done by sending money abroad
5. Foreign company pays corporation tax and employee taxes (mine) in country of residence.
6. UK company breaks even and has no expenses other than foreign co payments and bank account fees.

The only reason I have the UK company is because no one wants to send contract payments to a foreign company or foreign bank account, and no one seems to want to open a UK bank account for a foreign company. I'm basically just running a foreign company and paying tax locally.

If anyone knows a better way to deal with this please tell me.

[eek]

I previously asked about take home pay and contract vs perm and have spoken with the HR team who have said that they cannot do contract work and that I would need to be on the UK payroll although I could work remote if i needed to.

If I am on the UK payroll of a company and have my salary deducted at source is it possible to reclaim the tax deducted on the basis that I am non resident and instead live and reside in Switzerland?

I am doing this to minimise tax of course but I will genuinely be out of the UK and of course pay all taxes needed in my country

First question - does the client know you aren't going to be in the UK.

Once they discover that fact they probably won't be interested

[NotAllThere]

You posted the same question on 24.05.2021 here: https://www.englishforum.ch/finance-...itzerland.html Here's my answer again:

Could you please expand on that NAT - The UK company will pay me on the UK payroll - There is no way around that

Its up to me to recover it back from HMRC and elect to be taxed in switzerland.

My UK accountant has said he does not know if that would be possibel

If you live and work in Switzerland, you must pay the local equivalent of NI in Switzerland. Both employer's and employee's contribution. You can do that through ANOBAG. You are legally obliged to pay tax in Switzerland on your worldwide income. You do not "elect" to be taxed in Switerland.

Here's a couple of links for your interest. taxadvisermagazine HMRC

As far as UK payroll is concerned, your employer can keep you on that, but should in fact pay you gross - no NI or tax deductions at all. You should however negotiate an uplift to cover the employer's NI they don't have to pay either. There is a chance that the employer will run into difficulties with HMRC over their reporting if they incorrectly pay tax and NI for an employee who is not liable.

Another link:
https://shieldgeo.com/how-to-pay-you...-uk-employers/

Are you expecting a different answer?

[BlasterBates]

You can't legally be an employee of a UK company and work in Switzerland. The problem is the Swiss tax authorities will want to tax you in full irrespective of tax paid in the UK, notwithstanding issues such as not paying into the Swiss unemployment insurance and compulsory pension for which you may end up liable.

I would turn it down, or if you accept, travel to the UK to work.

[northernladuk]

https://www.gov.uk/guidance/living-i...#money-and-tax

And you might be better posting your questions on the HMRC forum. Not sure asking a question about perm taxation involving another country on a UK contractor forum is really the best option.

https://community.hmrc.gov.uk/forums/customerforums/