Reply to: Sole Trader Vs Ltd

[ASB]

If I can stay as UK resident for tax purposes would this be better than going through an Umbrella?

Whether you are a UK resident or not for tax purposes is a matter of the individual facts of your case, not choice. You actions can of course influence it. The same is true for Belgian tax residency. It is perfectly possible for you to be tax resident in BOTH the UK and Belgium. How the income is then taxed is resolved by the double taxation agreement in force.

[dave_m13]

This maybe have been put in a new Thread but its sort of connected.

I have the opportunity to return to Belgium but this time I will have to set up either Ltd or go through Umbrella/Management company. Reason Belgium company require all documents to be provided such as Company Certificate and Insurance etc.

If I can stay as UK resident for tax purposes would this be better than going through an Umbrella?

I have been lookign around the site on how to form a ltd company, any advise on the best and quickest way to do it? What insurance is required, I already have public and private as being sole trader.

Any decent umbrella's that deal with Belgium, I have looked a few, Itecs, etc. Anyone give recommendations?

Cheers

[ASB]

Thanks for the information guys, really helps.

Anyone know anything about the VAT if the end client is Zero rated and based abroad. I assume I still add the VAT to the rate for the agency as they will most probably be UK based and then let them deal with the zero rating.

Cheers tino, I usually drive there and have done this actual previous position for the past 2 years. So have a good idea what expenses will cost me from my books. I was direct with the client but due to the procedures they can no longer go sole source and its out to bidding. So I have had numerous agencies call me about the position.


Cheers
Dave

The agent is your customer. If you and they are in the UK you will [generally] add vat. The agent will of course reclaim it as input vat. What the agent has to do, which can be fairly complex cross border, is neither your problem nor your concern.

However, depending upon the exact pattern and a whole host of rules about where the services are supplied - of which your physical location makes no difference, and bizarrely in a number of cases where the services are actually supplied makes no difference (dependant upon the type of services) then it is possible [but unusual] that VAT is not chargeable even if you are billing a UK entity.

Look at the place of supply rules on HMRC website, they have a fairly comprehensive international section. Figure out how you think that applies to your circumstances. Then ask the helpline for an opinion (and it is only an opinion they will give). When you've done that ask the helpline again and see if you get the same answer.....

Of course this assumes you are VAT registered.

Also consider the impact of this in the flat rate vat scheme. IF your specific circumstances are such that the supplies are outside the scope of UK vat then you don't need to include it in your turnover for FRS. IF your circumstances are such that it is zero rated then you do need to include them (so YOU will end up about 12% - or whatever your FRS percentage is - out of pocket).

Do a search, it's been covered regularly but is somewhat contentious since it depends upon the exact circumstances and services being provided. No one size fits all answer.

[dave_m13]

Thanks for the information guys, really helps.

Anyone know anything about the VAT if the end client is Zero rated and based abroad. I assume I still add the VAT to the rate for the agency as they will most probably be UK based and then let them deal with the zero rating.

Cheers tino, I usually drive there and have done this actual previous position for the past 2 years. So have a good idea what expenses will cost me from my books. I was direct with the client but due to the procedures they can no longer go sole source and its out to bidding. So I have had numerous agencies call me about the position.


Cheers
Dave

[tino]

Still pretty new to contracting so excuse my stupid questions.

So I state a rate I'm happy with, I am sure that expenses will need to be included in the rate as well. When invoices are raised I add the VAT to the daily rate? What occurs when the end client is zero rated and abroad?

Yes, confirm the policy with them first though and adjust the rate accordingly - be careful not to underestimate the cost of flights and accomodation.

I'm unsure with regards to your VAT question though, someone more knowledgable than me will be along shortly though

[dave_m13]

You give them the rate you would be happy with, adjusting to take into account the expenses policy - don't include VAT

Still pretty new to contracting so excuse my stupid questions.

So I state a rate I'm happy with, I am sure that expenses will need to be included in the rate as well. When invoices are raised I add the VAT to the daily rate? What occurs when the end client is zero rated and abroad?

[expat]

This is sort of a reason why I asked the question.

I may have another contract opportunity but its going through an agency this time and they are asking for rate. Going direct is fine but through an agency, would you include agency fee and VAT in your rate or would your daily rate be seperate to these?

Also what about expenses, would this be charged to agency or would this have to included in the daily rate as well?

Thanks

The rate you quote is the money that you expect to get. Agency fee is not your affair. VAT is a legal requirement (if appropriate) so you don't need to advise the agency or the client of tax law, you just add it on.

Expenses are a matter for prior agreement between you and the agency. There is no fixed rule.

[tino]

This is sort of a reason why I asked the question.

I may have another contract opportunity but its going through an agency this time and they are asking for rate. Going direct is fine but through an agency, would you include agency fee and VAT in your rate or would your daily rate be seperate to these?

Also what about expenses, would this be charged to agency or would this have to included in the daily rate as well?

Thanks

You give them the rate you would be happy with, adjusting to take into account the expenses policy - don't include VAT

[dave_m13]

This is sort of a reason why I asked the question.

I may have another contract opportunity but its going through an agency this time and they are asking for rate. Going direct is fine but through an agency, would you include agency fee and VAT in your rate or would your daily rate be seperate to these?

Also what about expenses, would this be charged to agency or would this have to included in the daily rate as well?

Thanks

[expat]

This is not the case according to the Belgium police, .

I stand corrected.

[dave_m13]

ISTM that if you travel back and forth every weekend then you are not a cross-border worker. A cross-border worker is a precise definition, and IIRC you must live within a certain distance of the border (30km or some such) and commute every day.

Otherwise you're just somebody who chooses to spend his weekends somewhere else.

This is not the case according to the Belgium police, this was the only way I could get my car onto a secure base with keeping my existing UK number plates.

Due to the fact that I was travelling every weekend and my residence is UK I could not change UK number plates. Usually I would have had to change to belgium plates after 3-6 months cannot remember which but the police had stated that the UK and Belgium have agreement now that will allow you to work as a cross boarder.

So I went to the local town hall to advise them of this, I was taken off being a belgium resident and was changed to cross boarder worker.

[Not So Wise]

For you and client LTD is generally always the better way to go, for tax and liability reasons

Hence why most (all?) agencies (and most clients as well) refuse to deal with Sole Traders

Plus it's a lot "cleaner" for your accounts if you have the clearer dividing line between you and your business

[expat]

Thanks

The first contract I was def inside IR35 so I went down the self employed route but worked in belgium as a cross boarder worker not as a belgium resident as I travelled back and forth every weekend.

This is my second contract and the contract is good in that it does not state hours to be worked, I have to provide all equipement myself etc. looking at the contract I would say I am outside IR35, rate is Ok and they have no problem me being self employed.

Whether the extra cost of running a Ltd is better than being self employed I am not entirely sure.

ISTM that if you travel back and forth every weekend then you are not a cross-border worker. A cross-border worker is a precise definition, and IIRC you must live within a certain distance of the border (30km or some such) and commute every day.

Otherwise you're just somebody who chooses to spend his weekends somewhere else.

[dave_m13]

Thanks

The first contract I was def inside IR35 so I went down the self employed route but worked in belgium as a cross boarder worker not as a belgium resident as I travelled back and forth every weekend.

This is my second contract and the contract is good in that it does not state hours to be worked, I have to provide all equipement myself etc. looking at the contract I would say I am outside IR35, rate is Ok and they have no problem me being self employed.

Whether the extra cost of running a Ltd is better than being self employed I am not entirely sure.

[ASB]

Hi All

Just a question, in your opinions what would be the most tax efficient?

The couple of contracts I have had, I have been contracted direct with the clients, so have opted to be a sole trader rather than go down the ltd company route.

Out of curiosity more than anything would I be better off setting up my own Ltd company.

Thanks
Dave

Outside IR35 you're better off with a Ltd and paying small salary/dividends. If there is an IR35 risk then you would better off as a sole trader - though in this case any client using you on a sole trader basis is exposing themselves to a real risk of you being their ACTUAL employee.

Of course you need to factor in the running costs for the company which may make the gain pointless depending upon the sums involved.

There is no real possibility of an agency using you on an s/e basis due to the risks related with the above (and some others too).