Tax for non UK Consultant working in the UK

[davepoth]

Eric Mc said:

So.

The US corporation seems to be making use of UK based personnel. If that is the case, the US corporation may need to register for PAYE in the UK.

Possibly. Their argument will be that his employment is actually in the US and the time spent abroad is a business trip.

[LC23]

davepoth said:

Possibly. Their argument will be that his employment is actually in the US and the time spent abroad is a business trip.

The starting point is that income tax is due where the work is physically performed. One day spent working in the UK gives rise to a PAYE obligation on the income earned for that day. That's how onerous our PAYE rules are. There is an agreement you can put in place such that PAYE need not be operated where the indiviudal will ultimately be exempt under a DTT. But that's the point, there MAY be exemption where there is a DTT. It's not automatic.

[davepoth]

So how does that work for a salesperson sent abroad to close a business deal, or something similar? I'm intrigued.

Incidentally the Double Taxation treaty doesn't cover personal income for US citizens and holders of green cards; they'll get taxed in the US regardless of whether they get taxed in the UK.

[LC23]

davepoth said:

So how does that work for a salesperson sent abroad to close a business deal, or something similar? I'm intrigued.

Incidentally the Double Taxation treaty doesn't cover personal income for US citizens and holders of green cards; they'll get taxed in the US regardless of whether they get taxed in the UK.

That's true, but in this scenario it would be looking to get the individual out of UK tax. For US Green Card holders and citizens there is always US Federal tax to pay, albeit a credit is available for foreign tax paid on foreign source income.

Genuine business trips are usually ignored as each country will have a threshold whereby they will ignore days under this during the tax year as it is too much effort to try and collect the tax. And there will be DTT protection where the UK has one in place with that country. But that's the point, genuine business trips should be under those thresholds.

As I said, PAYE rules are onerous and we have an obligation to operate on one day spent in the UK in strict terms. Check out EP APP4 on HMRC's website for our rules on this and PAYE relaxation.

[Steffan]

LC23 said:

The starting point is that income tax is due where the work is physically performed. One day spent working in the UK gives rise to a PAYE obligation on the income earned for that day. That's how onerous our PAYE rules are. There is an agreement you can put in place such that PAYE need not be operated where the indiviudal will ultimately be exempt under a DTT. But that's the point, there MAY be exemption where there is a DTT. It's not automatic.

LC23is absolutely right. The PAYE legislation is NOT flexible.

You can misinform the Revenue. You may get away with it. But in just the same way as travelling at 40 in a 30 limit is illegal if you get caught you are in serious difficulty. Particularly if you are regarded by the Revenue as KNOWINGLY misinforming them. !00% penalty AND possible criminal charges.

They do not like this. Telling lies or being economical with the truth is regarded as evasion not avoidance. VERY DIFFERENT.

A few words of advice.

Read the IR35 legislation and when you have seen the sheer detail and volume and depth of the restrictions if you can find a loophole you are a better man than I.

And I have been looking for 20 years. You are at risk.

[flyingjase]

So to summarise - IR35 could put the Consultant as deemed employment, therefore be due PAYE on UK derived fees

Have I got that right from the above comments?

Ort, irrespective of IR35 as the engagement is clearly more than a business trip, the Consultant is liable for UK tax anyway despite the fact he goes back the USA every 5 weeks?

[LC23]

flyingjase said:

So to summarise - IR35 could put the Consultant as deemed employment, therefore be due PAYE on UK derived fees

Have I got that right from the above comments?

Ort, irrespective of IR35 as the engagement is clearly more than a business trip, the Consultant is liable for UK tax anyway despite the fact he goes back the USA every 5 weeks?

Yes - more than likely that PAYE is due from someone based on deemed employer rules. Need to check that this is the case and who is on the hook to withhold PAYE.

Irrespective of whether PAYE is due or not, the individual will likely have a UK tax obligation in any event.

Get some professional advice as the detail must be looked at. Happy to help if you want to PM me but for this sort of work it wouldn't be a five minute "freebie" to be honest.