Reply to: Working remotely for UK based Ltd company

[jamesbrown]

Thanks James, although your nose smells wrongly. My partner and I are leaving the UK, with a 2-3 year plan, and intend to only return after that plan is completed (or possibly longer than 2-3 years) I guess it is a tax dodge in that I would like to be in a position of not paying any tax since I am not going to use anything the UK has to offer, but will still work for a large international company. They hold a presence in UAE and maybe I should be looking to do things locally via them while doing the work for the UK arm?

Being a non financial/tax person, it seems silly to me that I should be paying tax to the country when I am not there, yet ironically the same country would allow Billy from elsewhere in the world, bring his grandma to the UK and allow them free usage of our NHS without having paid a penny in tax.

Fair enough . If you're moving abroad for the long-term, as described, you'll want to properly cut your ties with the UK. It's important for residency status (take a look at the latest rules: Residence and Domicile - can expats still rely on non-resident status?), but beyond that it's just sensible; you really don't want the enormous headache and expense of cross-border personal or corporate taxation to deal with. Set yourself up properly in the UAE, either as an employee of your current multinational (i.e. through their UAE payroll) or as a contractor through your own company based in the UAE, invoicing the UK-arm of the multi-national if necessary. Best of luck. And remember that your company is, more than likely, looking out for themselves in suggesting a particular arrangement, so look for professional advice if you're unclear about any specifics.

[Trim]

You need professional advice. For one, your company is primarily looking out for themselves here.

However, in short, if you have a UK resident company (your intentions on this are unclear) you will pay corporation tax in the UK on worldwide profits. Likewise, if you are personally UK resident, you will pay personal taxes in the UK on your worldwide income. And it isn't nearly as simple as you'd imagine to become non-UK resident for tax purposes on leaving the UK temporarily. You essentially have to cut most or all ties in the UK and be planning to spend a considerable length of time employed abroad (as in, more than a year). If you're planning to move to Dubai "permanently", you should either look to continue as an employee of your company in Dubai or set-up a company in Dubai and invoice them (indeed, why on earth would you have a UK company if you are "relocating" to Dubai?). If this is some sort of attempted tax dodge - and it sort of smells that way without further info. - think again - you'd better be very clear about your residency status and the latest rules (since April this year) if you're planning to become non-UK resident for tax purposes.

Thanks James, although your nose smells wrongly. My partner and I are leaving the UK, with a 2-3 year plan, and intend to only return after that plan is completed (or possibly longer than 2-3 years) I guess it is a tax dodge in that I would like to be in a position of not paying any tax since I am not going to use anything the UK has to offer, but will still work for a large international company. They hold a presence in UAE and maybe I should be looking to do things locally via them while doing the work for the UK arm?

Being a non financial/tax person, it seems silly to me that I should be paying tax to the country when I am not there, yet ironically the same country would allow Billy from elsewhere in the world, bring his grandma to the UK and allow them free usage of our NHS without having paid a penny in tax.

[jamesbrown]

Apologies for bringing up an old post, but I have a very similar situation arising for myself.

I am expecting to relocate to Dubai in a couple of months and my company would like to keep me, however have advised me to become a contractor rather than a standard PAYE.

I think I've gathered from this thread that you are only liable to pay tax based on the country you are reisident, so in my case this would be Dubai (which is tax free). In this instance, is there really a need for me to setup a LTD company? if so, doesn't this mean that the LTD company would end up paying tax as it's trading with the UK client (multinational company, holds a UK arm)?

Completely new to this idea of contracting, it scares the jeepers out of me to be honest. I had hoped that being in Dubai meant I didn't need to pay any taxes

You need professional advice. For one, your company is primarily looking out for themselves here.

However, in short, if you have a UK resident company (your intentions on this are unclear) you will pay corporation tax in the UK on worldwide profits. Likewise, if you are personally UK resident, you will pay personal taxes in the UK on your worldwide income. And it isn't nearly as simple as you'd imagine to become non-UK resident for tax purposes on leaving the UK temporarily. You essentially have to cut most or all ties in the UK and be planning to spend a considerable length of time employed abroad (as in, more than a year). If you're planning to move to Dubai "permanently", you should either look to continue as an employee of your company in Dubai or set-up a company in Dubai and invoice them (indeed, why on earth would you have a UK company if you are "relocating" to Dubai?). If this is some sort of attempted tax dodge - and it sort of smells that way without further info. - think again - you'd better be very clear about your residency status and the latest rules (since April this year) if you're planning to become non-UK resident for tax purposes.

[Trim]

Apologies for bringing up an old post, but I have a very similar situation arising for myself.

I am expecting to relocate to Dubai in a couple of months and my company would like to keep me, however have advised me to become a contractor rather than a standard PAYE.

I think I've gathered from this thread that you are only liable to pay tax based on the country you are reisident, so in my case this would be Dubai (which is tax free). In this instance, is there really a need for me to setup a LTD company? if so, doesn't this mean that the LTD company would end up paying tax as it's trading with the UK client (multinational company, holds a UK arm)?

Completely new to this idea of contracting, it scares the jeepers out of me to be honest. I had hoped that being in Dubai meant I didn't need to pay any taxes

[NotAllThere]

Did you ever get an answer on this Carrie?

What matters most is where you are resident and where you are physically performing the work.
Having a ltd co in between you and the client only affects the ltd co - not you.
The location of the client is largely irrelevant.

[jamesbrown]

That might take care of the personal tax issues, but still leaves the sticky 'company residency' issue, which might be hard to get around.

I know this is an old topic/post by the OP, but....

Not necessarily. There's a very complex mechanism to avoid deferral of income through a foreign controlled corporation, known as subpart F. Even filing the relevant portion of the tax return can run into several thousand dollars.

[ldn]

So in order to invoice through the UK company from overseas, you need an overseas company in the country of residence? Then do you cross charge the income from the UK Ltd company to the overseas one where the tax is payable? (so net income in the UK entity is nil?) How is that done? as a management charge? Any help would be appreciated- I have moved to Canada but have continued to invoice through UK ltd company for work for UK clients. Being in canada was only supposed to be a temporary thing so I didn't look into the issues in too much detail- but I have now been in Canada for 8 months and am really worried.

Did you ever get an answer on this Carrie?

[Carrie]

please help

I currently work remotely for a UK company remotely, from Switzerland. I do not charge VAT, I and my company are Swiss resident and pay tax only in Switzerland. To be able to do this, I have to be legally able to work in Switzerland, and have a Swiss registered company.

I would imagine the situation in the US would be similar. You must check that you can legally work, even for an off-shore company remotely, in the US.

So in order to invoice through the UK company from overseas, you need an overseas company in the country of residence? Then do you cross charge the income from the UK Ltd company to the overseas one where the tax is payable? (so net income in the UK entity is nil?) How is that done? as a management charge? Any help would be appreciated- I have moved to Canada but have continued to invoice through UK ltd company for work for UK clients. Being in canada was only supposed to be a temporary thing so I didn't look into the issues in too much detail- but I have now been in Canada for 8 months and am really worried.

[BlasterBates]

You're taxed where you work. So you'd have to setup a US company or register self-employed. That is the same everywhere.

[FHK]

Hi All,

Thanks so much for your advice & input. It is very much appreciated, and gives me enough food for thought over the coming week before I make a decision on my next steps (better understanding of 'company residency' for starters!)

I think I was hoping that somehow it didn't matter where my laptop & I (or the company I set up) are actually physically located if the company i'd be contracting for were in the UK.

Better put the idea of working from a beach in the Caribbean with a coconut cocktail back in it's box for now.

Again, thank you!

[NotAllThere]

I currently work remotely for a UK company remotely, from Switzerland. I do not charge VAT, I and my company are Swiss resident and pay tax only in Switzerland. To be able to do this, I have to be legally able to work in Switzerland, and have a Swiss registered company.

I would imagine the situation in the US would be similar. You must check that you can legally work, even for an off-shore company remotely, in the US.

[stek]

And you might want to consider your legal visa status in UK, you will loose your spouse visa status but if you relocate back to UK in five years time you should be able to re enter the UK after applying for ILE in the US.

I wouldn't risk re entering the UK on your spouse visa while still in date, if the IO found out it was effectively void you could face a ten year ban for attempting to circumvent the immigration rules, better to apply for a UK tourist visa if you need to visit the UK during this time, or a business visa if visiting your employer. Whatever you do don't attempt to enter the UK on a voided spouse visa!

[Greg@CapitalCity]

Maybe a dumb idea, but can she have a UK Ltd to invoice through and simply not take any money out until returning to the UK (if the husband earns enough to do so)?

That might take care of the personal tax issues, but still leaves the sticky 'company residency' issue, which might be hard to get around.

[d000hg]

Maybe a dumb idea, but can she have a UK Ltd to invoice through and simply not take any money out until returning to the UK (if the husband earns enough to do so)?

[Greg@CapitalCity]

Hi FHK, a ltd company arrangement usually falls apart when you consider the residency status of the UK ltd company. If you are the sole director, and all your company fee earning work is generated in the US where you live, the UK ltd contractor company will usually be deemed US resident. You would pay UK tax on any earnings derived from UK work (none, since you won't live here), and pay US tax on the company earnings derived from the US (which will be all of it).

I have only touched on the unwieldy US tax system, but know enough that this arrangement would most likely be complicated and untenable.

Working through a UK PAYE umbrella would also raise US tax, and cross border issues, but my feeling is this would be less complicated than the ltd company route.

Often the ideal solution is to work through a UK based ltd company/PAYE umbrella while you are living/working in the UK, and work through a US based structure when living and working in the US.