Reply to: HELP! Working for US, LLC as UK based Contractor

[jamesbrown]

Oh, btw, I had a question for you here:

https://forums.contractoruk.com/umbr...sidiction.html

Didn't you go with an Employer of Record/payroll company for a US employment? Perhaps you can recommend it for the OP...

[jamesbrown]

Only if they are making taxable supplies above the threshold. If all of the income is B2B services with the US client they won’t have any income contributing towards the VAT threshold, so registration would be voluntary (but maybe still worth it for reclaiming VAT on expenses).

Sure, supplies that are outside of the scope of VAT do not contribute to taxable turnover for VAT registration purposes. It wasn't entirely clear to me whether the US client was the only turnover in question since they were talking about "turnover in the UK" too (which could just mean the same turnover). Either way, registering for VAT is easy and submitting quarterly returns is easy and the OP will probably have some VATable expenses, so there is probably little reason not to register.

[TheCyclingProgrammer]

Yes, you would need to register for VAT.

Only if they are making taxable supplies above the threshold. If all of the income is B2B services with the US client they won’t have any income contributing towards the VAT threshold, so registration would be voluntary (but maybe still worth it for reclaiming VAT on expenses).

[jamesbrown]

It's interesting that so few firms are willing to quote on a US Contract for professional indemnity! Better get my thinking cap on.

Thanks for all the advice so far

Fewer, certainly, but it isn't that hard, you just need to know where to look. Join IPSE and use Randell Dorling, underwritten by Hiscox, or try Kingsbridge. In both cases, you are looking at a few hundred quid for PI cover with Delaware jurisdiction and governing law (obviously more as the PI amount increases).

[ladymuck]

It's interesting that so few firms are willing to quote on a US Contract for professional indemnity! Better get my thinking cap on.

Thanks for all the advice so far

PolicyBee might help you there. No idea if they're any good but they have a page on their website which gives the impression that they will entertain such requests.

https://www.policybee.co.uk/blog/us-...onal-indemnity

The issue is the with the jurisdiction applied to the contract, which determines which country's law is applicable.

[Fred Bloggs]

It's interesting that so few firms are willing to quote on a US Contract for professional indemnity! Better get my thinking cap on.

Thanks for all the advice so far

Why do you think I mentioned it? The jurisdiction is by far the most litigious in the world and settlements of many tens of millions are quite commonplace.

The surprising thing to me would be if you can get anyone to quote at all. Or to quote for cover at a half reasonable price with fair prospects of actually being able to claim.

[Jonty789]

It's interesting that so few firms are willing to quote on a US Contract for professional indemnity! Better get my thinking cap on.

Thanks for all the advice so far

[cojak]

This with big brass knobs on. Make sure no contractual stuff references you personally. Any contracts should be with an incorporated entity at your end.

To make absolutely clear: as a sole trader, you could lose your house if the contract goes wrong.

[jamesbrown]

This is extremely helpful, thank you very much all for your timely responses.

So a simple way seems to be to setup a sole trader in the UK and then invoice clearly stating there is no VAT.

A few questions that follow, assuming i setup as a sole trader
1) W-8BEN (as an individual) is the form I will need to fill in and give to the US company?
2) I assume given the amounts involved, I will need to register for VAT given the turnover in UK? Although this contractor arrangement is outside VAT (given what we discussed)
3) Will I be ok to invoice in dollars? Am I also allowed to claim some expenses as a sole trader?

Thanks
Jonty

Yes, but the W8-BEN is only needed if they ask for it (they should). This isn’t actually sent to the IRS, it is just kept on record by the client.

Yes, you would need to register for VAT.

Yes, you can invoice in USD. Get a Wise account or similar.

Note the warnings above about being a sole trader. It does open you up to unlimited personal liability, in principle, which is why I wouldn’t take this route, even though it is a perfectly legitimate option. You can limit this liability with insurance, but insurance will only cover you up to a limit (and when the conditions are met).

[Fred Bloggs]

Do not work for an American firm without a limited liability entity between you and the client

This with big brass knobs on. Make sure no contractual stuff references you personally. Any contracts should be with an incorporated entity at your end.

[Fred Bloggs]

This is extremely helpful, thank you very much all for your timely responses.

So a simple way seems to be to setup a sole trader in the UK and then invoice clearly stating there is no VAT.

A few questions that follow, assuming i setup as a sole trader
1) W-8BEN (as an individual) is the form I will need to fill in and give to the US company?
2) I assume given the amounts involved, I will need to register for VAT given the turnover in UK? Although this contractor arrangement is outside VAT (given what we discussed)
3) Will I be ok to invoice in dollars? Am I also allowed to claim some expenses as a sole trader?

Thanks
Jonty

1 No idea.

2 I wouldn't do anything intil got near to the VAT threshold myself.

3 Dollar invoice is fine.

Don't be a self employed sole trader. That = Unlimited personal liability. Legitimate business expenses are not a problem.

[eek]

Do not work for an American firm without a limited liability entity between you and the client

[Jonty789]

This is extremely helpful, thank you very much all for your timely responses.

So a simple way seems to be to setup a sole trader in the UK and then invoice clearly stating there is no VAT.

A few questions that follow, assuming i setup as a sole trader
1) W-8BEN (as an individual) is the form I will need to fill in and give to the US company?
2) I assume given the amounts involved, I will need to register for VAT given the turnover in UK? Although this contractor arrangement is outside VAT (given what we discussed)
3) Will I be ok to invoice in dollars? Am I also allowed to claim some expenses as a sole trader?

Thanks
Jonty

[Fred Bloggs]

OP, I suggest you sort out the professional indemnity and public liability insurance side of things as a priority. It could be a shock how much it costs, if you can get cover for a US contract. You don't want to do work for a potentially litigious client without good insurance cover. Assuming the contract is governed by US law.

[jamesbrown]

I see hobnob linked a relevant thread. On VAT, this will be determined by the VAT place of supply rules, assuming you don’t go with an umbrella employment (in which case it is irrelevant). Where the supply is B2B and enjoyed in the US (and not customers in the UK), then your invoices will be outside of the scope of UK VAT and your invoices will clearly note this (“outside of the scope of UK VAT”) with no VAT added. This is the most likely outcome.