Reply to: How can I contract in London through my (foreign) limited company?

[m0n1k3r]

Hi everyone,

I want to contract in London for 6 months for some international experience. I'm based in Switzerland and I have a limited company which I use to contract to the big Swiss banks. I need to work through my Swiss company so I can write off my London expenses.

I know its perfectly legal to do this, but I also know agencies don't care and won't entertain the idea of dealing with a foreign company.

How can I accomplish this? With such a short term contract it doesn't make sense for me to establish a UK subsidiary. Are there (trustworthy) UK companies who would be a middleman for a small fee and then pay out to my Swiss company? If so, can anyone provide some names? I'm looking to totally avoid the UK government bureaucracy as I will pay myself in Switzerland and thus handle all social/tax issues in a Swiss context.

Thanks in advance
Steve

Agencies don't know the actual rules, so they take a very cautious route and demand UK company, UK bank account.

You can either register your company as a foreign branch in the UK (https://www.gov.uk/government/public...re-obligations) and then set up a UK bank account, or simply set up a local UK subsidiary, which keeps Swiss and UK concerns separated and clean. The banks also like it better.

My friends in Switzerland generally run GmbH's, but they are not quite comparable to a limited company so the foreign branch route might be a bit more complicated if that's what you have. A few others I know have ganged together and started an AG, which works perfectly well.

[sal]

Often the big boys office in a tax haven is just a box number at their accountants office, no reason anyone else couldn't hire an accountant there and do the same.

The reason is that for any sane (wo)man the cost+risk > benefit. Even if for some miraculous reason you find a way to apply the loop holes for a 1 man band.

[CoolCat]

Erm.. You can't just sweep the differences under the carpet like that. For a start we don't have a head office based in a foreign country so can't even begin to look at this setup. That's a ridiculous statement.

Often the big boys office in a tax haven is just a box number at their accountants office, no reason anyone else couldn't hire an accountant there and do the same.

[Sue B]

Probably also need to understand the Offshore Intermediaries Legislation (2014) because regardless of what you want to achieve, the end client or agency has a responsibility to report your income to HMRC where the work takes place in the UK.

The purpose of this legislation is to stop UK companies making payments to offshore intermediaries without first accounting for income tax and NI or, ensuring that there is someone in the contractual chain (such as a UK Umbrella or UK Ltd Co) is doing this.

Finance Act 2014, s 20 amends ITEPA 2003 s 689 to state that, where there is a UK agency in the contractual chain, that agency must operate PAYE and National Insurance.

Where there is no UK agency in the contractual chain, the end-user or client is responsible for operating PAYE and National Insurance.

HTH

[Lance]

No there isn't for tax purposes. They simply use legal ways to reduce profit in UK.
It makes sense if it will save you XXX mils in tax. No so much so, if it will save you X(X) 000.

Google UK Ltd. for example, don't have any directors in the UK. There's a rather large difference between you and Google.

[northernladuk]

No there isn't for tax purposes. They simply use legal ways to reduce profit in UK.
It makes sense if it will save you XXX mils in tax. No so much so, if it will save you X(X) 000.

Erm.. You can't just sweep the differences under the carpet like that. For a start we don't have a head office based in a foreign country so can't even begin to look at this setup. That's a ridiculous statement.

[stek]

No there isn't for tax purposes. They simply use legal ways to reduce profit in UK.
It makes sense if it will save you XXX mils in tax. No so much so, if it will save you X(X) 000.

Wrong.

[kolata]

There's a world of difference between multi-national plc and one-man-contractor Ltd...

No there isn't for tax purposes. They simply use legal ways to reduce profit in UK.
It makes sense if it will save you XXX mils in tax. No so much so, if it will save you X(X) 000.

[SueEllen]

There's a world of difference between multi-national plc and one-man-contractor Ltd...

This.

If you want to have subsidiaries in different countries who pay a licence fee, you need to make sure you are not a one man limited company.

The employee will then have to pay taxes including social taxes in the country they did the work but the company can play around with which subsidiary owns the profit.

Oh an Accenture have tried to do what the OP has mentioned in Nordic countries and they found their employees had to pay tax where they worked.

[CoolCat]

Well you need to think about what is least hassle really.

You can setup lots of ways of doing it legally, just some are a lot more hassle.

The big boys do it all the time, and there are ways of moving the money round.

For instance Cognizant UK Ltd was for a long time (don't know if their current UK trading entity still is) a company registered in Mauritius despite having UK in the title. Many advantages to being registered somewhere like Mauritius such as no need to file accounts, so lots can be hidden. All the UK banks etc were happy to let this foreign entity have a UK bank account, and they happily ran a UK payroll etc.

The classic way of moving money from one country to another is to use multiple legal entities, the one in the lowest tax jurisdiction charges the other entities (where the money is earned) for use of the brand which they own, then the money can be moved as a charge for use of the brand. Hence the entity in the high tax country can show little or no profit while the money is moved to the low tax country as a payment for use of the brand.

And so on and so on.

[stek]

Sure they do - Starbucks.
Yes, tax is due where the work is done, AFTER you paid your "license"/franchise fee/<you name it> to your Luxembourg based mothership company. Which expense is 95% of your turnover.

There's a world of difference between multi-national plc and one-man-contractor Ltd...

[oliverson]

Given the state of the market it's almost like a hypothetical question.

It's like me saying "when I win the lottery next weekend how best should I invest my windfall" :-D

[northernladuk]

Sure they do - Starbucks.
Yes, tax is due where the work is done, AFTER you paid your "license"/franchise fee/<you name it> to your Luxembourg based mothership company. Which expense is 95% of your turnover.

Really useful thanks.... :/

[kolata]

Because tax is due where the work is done.

Sure they do - Starbucks.
Yes, tax is due where the work is done, AFTER you paid your "license"/franchise fee/<you name it> to your Luxembourg based mothership company. Which expense is 95% of your turnover.

[stek]

Is this allowed? And if it is then why everyone do not register a company in offshore with taxes close to zero and then transfer income from British company into offshore one?

Because tax is due where the work is done.