Reply to: Working with a EU based company in the UK

[Confounded]

non-dom working in the UK via non-UK company

I know this is somewhat an old thread, but we are in a similar situation and were wondering what happens in such a case. My partners and I are not resident in the UK and we operate via a non-UK-based company. We are in the process of getting a contract with a UK-based company (which operates via an agency). One of us will be providing services on client’s cite (i.e. in the UK) while others will be working on the project from our home country. It is, hopefully, a long term project, so the person working in the UK will be there more than 6 month.

What are the tax liabilities of the person working on cite in the UK? Can he / she claim a non-UK domicile and pay tax only on income brought into the UK? How do they pay tax in the UK – it is some form of self-assessment? Can they claim long-term rent as an allowable expense? Any other important point that you can share from your experience.

And lastly, can someone recommend a company / accountancy firm that can advise and handle this situation? (I have approached SJD and their international division, but they are not dealing with non-UK-based contractors.)

Thank you

[stek]

Yes, but this is irrelevant if I am seconded from a EU company.

Would be if you were not from the EU with no UK visa or EU residence permit

[garnet]

Do you have the right to work in the UK?

Yes, but this is irrelevant if I am seconded from a EU company.

[stek]

I am not UK resident or citizen. Sorry for not mentioning it. I am aware though that if I am seconded for more than 6 months to UK, I will become resident and will need to pay taxes on my salary, which is paid by my overseas company. I wont have any salary paid to me by the UK company I'd work for. This is not a problem.
As for the expenses - it applies to travelling to/from UK to company's country only.
Very interested why agencies wouldn't work with foreign company in that way?

Do you have the right to work in the UK?

[Sally@InTouch]

I wasn't thinking you were insinuating anything. Thanks for your opinion. By the general tone of the posts I just felt the older dogs here jumped at me. Maybe I didn't make it very clear what my circumstances were. By the way some people sounded it seems they are happy to pay as much tax as they are told by HMRC. Well for me minimizing taxes is a priority.
As for the agency - well they will have a choice - either work with EU company, or I work with another agency. It is a bit weird situation - the end client wants me, but they can pay my LTD directly. They have a list of UK agencies they work with. I was even hinted I might pick up the agency I want to work with. So this leaves me some options before "eventually" being forced to set up a UK ltd.

At least you have a choice of agencies. Maybe start calling them, check out the situation so you can plan in advance. Good luck with it

[garnet]

I do hope you didn't think I was insinuating that you wouldn't pay your taxes, I wasn't! And I also appreciate that you are not offshore, I just think, and this is in my opinion, that an agency won't work with you.

I wasn't thinking you were insinuating anything. Thanks for your opinion. By the general tone of the posts I just felt the older dogs here jumped at me. Maybe I didn't make it very clear what my circumstances were. By the way some people sounded it seems they are happy to pay as much tax as they are told by HMRC. Well for me minimizing taxes is a priority.
As for the agency - well they will have a choice - either work with EU company, or I work with another agency. It is a bit weird situation - the end client wants me, but they can't pay my LTD directly. They have a list of UK agencies they work with. I was even hinted I might pick up the agency I want to work through. So this leaves me some options before "eventually" being forced to set up a UK ltd.

[Sally@InTouch]

To be perfectly honest I dont plan NOT to pay my taxes.It all comes to paying the least amount of tax. This is something we all want anyway. In this respect the UK agency is safe that NO tax liabilities will be passed on them. I think this scheme is very transparent to the HMRC, it really goes by their book. Moreover the company is not registered in an offshore country.
Besides the chance the agency not to work with overseas company, what are the other benefits of operating with a UK based ltd?

I do hope you didn't think I was insinuating that you wouldn't pay your taxes, I wasn't! And I also appreciate that you are not offshore, I just think, and this is in my opinion, that an agency won't work with you.

[garnet]

In the UK contracting industry we are blighted by legislation. Managed Service Company, Transfer of Debt Provision, IR35, Agency Workers Regulations to name some. Agencies need to protect themselves for being liable for transfer of debts from workers if they don't pay their taxes. Add on to that the many offshore tax schemes that HMRC have targeted in the past couple of years and that's enough to make the majority of agencies only deal with either an umbrella company or individual UK limited companies. This mitigates any liability to them should you fail to pay your taxes.

To be perfectly honest I dont plan NOT to pay my taxes.It all comes to paying the least amount of tax. This is something we all want anyway. In this respect the UK agency is safe that NO tax liabilities will be passed on them. I think this scheme is very transparent to the HMRC, it really goes by their book. Moreover the company is not registered in an offshore country.
Besides the chance the agency not to work with overseas company, what are the other benefits of operating with a UK based ltd?

[Sally@InTouch]

Very interested why agencies wouldn't work with foreign company in that way?

In the UK contracting industry we are blighted by legislation. Managed Service Company, Transfer of Debt Provision, IR35, Agency Workers Regulations to name some. Agencies need to protect themselves for being liable for transfer of debts from workers if they don't pay their taxes. Add on to that the many offshore tax schemes that HMRC have targeted in the past couple of years and that's enough to make the majority of agencies only deal with either an umbrella company or individual UK limited companies. This mitigates any liability to them should you fail to pay your taxes.

[BlasterBates]

I am not UK resident or citizen. Sorry for not mentioning it. I am aware though that if I am seconded for more than 6 months to UK, I will become resident and will need to pay taxes on my salary, which is paid by my overseas company. I wont have any salary paid to me by the UK company I'd work for. This is not a problem.
As for the expenses - it applies to travelling to/from UK to company's country only.
Very interested why agencies wouldn't work with foreign company in that way?

You need to register your company in the UK, probably best to setup a UK Ltd. Just because you are in the UK for less than 6 months doesn't necessarily mean you pay no tax.

Best to set yourself up as a UK Ltd or UK umbrella and then claim any relief on the basis of you being nonresident.

You need the services of a UK accountant to sort things out.

[NotAllThere]

Many agency won't deal with a foreign ltd co, since it is harder for them to determine if you're operating legally, and if you're not, they may end up liable for taxes and NI.

I did work in the UK for a 3 month contract and didn't pay any tax. Probably my company should have paid tax to HMRC on the profit generated by the work in the UK. However, no profit was generated, as all company profit is paid out as salary (no dividend route in my home country), so I didn't think it worth bothering them. With a three month contract and weekly commuting, I was not tax resident, so didn't need to worry about that.

[garnet]

Hard for us to comment with such wooly information and not answering questions you were asked.

Are you a UK resident just looking to evade tax?

Jessica asked you this a few posts up. Until we know the full story there is no way in hell we can give you a clear answer. If you are a UK citizen with an offshore LTD and are looking to claim expenses while in the UK then god help you. We are not the people to be asking.

More detail if you want any credible advice.

I am not UK resident or citizen. Sorry for not mentioning it. I am aware though that if I am seconded for more than 6 months to UK, I will become resident and will need to pay taxes on my salary, which is paid by my overseas company. I wont have any salary paid to me by the UK company I'd work for. This is not a problem.
As for the expenses - it applies to travelling to/from UK to company's country only.
Very interested why agencies wouldn't work with foreign company in that way?

[Sally@InTouch]

Other thing here: as a seconded person you are allowed to travel expenses, accommodation and daily money, which are NOT taxable in the UK.
Anyone know something about this?

As a permanent worker there are travel expense rules that would apply on secondments, but with contracting and you choosing to place yourself abroad I'm thinking that the special rules on foreign travel that we have in the UK, may possibly have similar tax law of the other country, therefore restricting your expenses to flights and the travel to and from the airport only.

You also need to consider that agencies probably wouldn't touch you with a barge pole.

[northernladuk]

Hard for us to comment with such wooly information and not answering questions you were asked.

Are you a UK resident just looking to evade tax?

Jessica asked you this a few posts up. Until we know the full story there is no way in hell we can give you a clear answer. If you are a UK citizen with an offshore LTD and are looking to claim expenses while in the UK then god help you. We are not the people to be asking.

More detail if you want any credible advice.

[garnet]

If you were to set up a business in the UK you might be able to second yourself there from your other company. That might be possible, but complicated I suspect.

Yes, seconding is the key here. I found that you can second yourself from a foreign company to work in the UK (say, on client's site) for max of 2 years.
Since you will be UK resident (spending 183 days in the UK) you will need to pay income tax on your salary in the UK and then the amounts you've paid will be balanced against your income taxes of the company's country of registration. This way you want be income taxed twice.
Other thing here: as a seconded person you are allowed to travel expenses, accommodation and daily money, which are NOT taxable in the UK.
Anyone know something about this?