Tax for non UK Consultant working in the UK
Discussion
Spurred on by some of the discussion in the cgt avoidance thread, I was wondering if anyone can shed any light on this subject.
I have an interest in a small recruitment company that has engaged a Canadian Consultant that 'lives' in the USA. He runs a Consultancy with 16 staff that are deployed throughout the world.
We have placed him on one of our client sites at £1200 per day to him which is paid to his American consultancy. This has been going on for 2 years.
We have now placed him into another UK client on the same rate.
He returns to his farm in the USA every 5 weeks (so he says anyway)
My view is that if he lives and works in the UK, he must pay UK tax.
He claims he doesn't 'live' in the UK as he rents here and returns 'home' to the States every 5 weeks.
I personally feel he should pay some tax in the UK and have asked him to engage with us via a UK limited company which he is resisting
Can anyone shed any light on whether I'm right or he is?
I have an interest in a small recruitment company that has engaged a Canadian Consultant that 'lives' in the USA. He runs a Consultancy with 16 staff that are deployed throughout the world.
We have placed him on one of our client sites at £1200 per day to him which is paid to his American consultancy. This has been going on for 2 years.
We have now placed him into another UK client on the same rate.
He returns to his farm in the USA every 5 weeks (so he says anyway)
My view is that if he lives and works in the UK, he must pay UK tax.
He claims he doesn't 'live' in the UK as he rents here and returns 'home' to the States every 5 weeks.
I personally feel he should pay some tax in the UK and have asked him to engage with us via a UK limited company which he is resisting
Can anyone shed any light on whether I'm right or he is?
Yes I think he has a real problem. And unfortunately so do you.
IR35. I suggest you Google IR 35 and read as much as possible.
A classic piece of Revenue legislation that is designed SPECIFICALLY to prevent this kind of device. And it does.
You will see, particularly from my later comments on the other thread,that in my view 95% of offshore tax avoidance only works because the individuals involved either deliberately or unintentionally misinform the Revenue.
Either way this arrangement is so clearly full of holes there is no hope.
There are ways `to protect yourself.
You are not your employees keeper under English law BUT at the moment you are wide open to an investigation. Without a defence.
If you email me the details I will give you a method which will protect you.
So far as your employee is concerned I think avoiding UK tax in this situation is virtually impossible given the brief facts
IR35. I suggest you Google IR 35 and read as much as possible.
A classic piece of Revenue legislation that is designed SPECIFICALLY to prevent this kind of device. And it does.
You will see, particularly from my later comments on the other thread,that in my view 95% of offshore tax avoidance only works because the individuals involved either deliberately or unintentionally misinform the Revenue.
Either way this arrangement is so clearly full of holes there is no hope.
There are ways `to protect yourself.
You are not your employees keeper under English law BUT at the moment you are wide open to an investigation. Without a defence.
If you email me the details I will give you a method which will protect you.
So far as your employee is concerned I think avoiding UK tax in this situation is virtually impossible given the brief facts
Steffan said:
Yes I think he has a real problem. And unfortunately so do you.
IR35. I suggest you Google IR 35 and read as much as possible.
A classic piece of Revenue legislation that is designed SPECIFICALLY to prevent this kind of device. And it does.
You will see, particularly from my later comments on the other thread,that in my view 95% of offshore tax avoidance only works because the individuals involved either deliberately or unintentionally misinform the Revenue.
Either way this arrangement is so clearly full of holes there is no hope.
There are ways `to protect yourself.
You are not your employees keeper under English law BUT at the moment you are wide open to an investigation. Without a defence.
If you email me the details I will give you a method which will protect you.
So far as your employee is concerned I think avoiding UK tax in this situation is virtually impossible given the brief facts
IR35. I suggest you Google IR 35 and read as much as possible.
A classic piece of Revenue legislation that is designed SPECIFICALLY to prevent this kind of device. And it does.
You will see, particularly from my later comments on the other thread,that in my view 95% of offshore tax avoidance only works because the individuals involved either deliberately or unintentionally misinform the Revenue.
Either way this arrangement is so clearly full of holes there is no hope.
There are ways `to protect yourself.
You are not your employees keeper under English law BUT at the moment you are wide open to an investigation. Without a defence.
If you email me the details I will give you a method which will protect you.
So far as your employee is concerned I think avoiding UK tax in this situation is virtually impossible given the brief facts
Lots of sense in the above post. Even worse is that the end user client may be the one on the hook for PAYE and possibly NIC unless things are restructured. bobbylondonuk said:
If the payment is to a foreign company. then there is no tax implication for the client???
If the consultant is being paid from the foreign company...Again the personal tax implication of the consultant is via self assessment showing US taxes paid vs UK taxes due??
There are real problems with this arrangement. No protection of a UK LTD or Partnership means either the UK Company or end user could well be liable for PAYE/NIC under our deemed employer rules. Top of my head I think it is S691 ITEPA but I don't have the legisaltion to hand as it's a Saturday!If the consultant is being paid from the foreign company...Again the personal tax implication of the consultant is via self assessment showing US taxes paid vs UK taxes due??
bobbylondonuk said:
If the payment is to a foreign company. then there is no tax implication for the client???
If the consultant is being paid from the foreign company...Again the personal tax implication of the consultant is via self assessment showing US taxes paid vs UK taxes due??
True enough. By paying the company, you should be avoiding the income tax problem. There may be a VAT issue but that would be on their side not yours.If the consultant is being paid from the foreign company...Again the personal tax implication of the consultant is via self assessment showing US taxes paid vs UK taxes due??
If he is dodging tax, I'd be wondering how good this consultant was - if he can't be bothered to follow these regulations, what other ones is he dodging?
davepoth said:
True enough. By paying the company, you should be avoiding the income tax problem. There may be a VAT issue but that would be on their side not yours.
If he is dodging tax, I'd be wondering how good this consultant was - if he can't be bothered to follow these regulations, what other ones is he dodging?
Only paying a UK Ltd would "get round" the problem. With an offshore company this doesn't work.If he is dodging tax, I'd be wondering how good this consultant was - if he can't be bothered to follow these regulations, what other ones is he dodging?
davepoth said:
The Double Taxation Treaty with the US would stop UK tax being liable on a service provided by a US company that didn't have a permanent establishment within the UK wouldn't it?
Are we talking about corporation tax or personal income tax? There is likely to be a PAYE obligation on the individual working in the UK which would fall on either the UK contracting company or the end user. The US contractor may ultimately not be liable to UK personal income tax under the terms of the DTT but a number of factors such as his UK residence position, days spent in the UK, time spent back in the US, where the costs of his employment are ultimately borne need to be taken into account.On the corporation tax front I am not a CT adviser so cannot comment in detail. But if the consultancy firm has no presence in the UK, but this guy is working here, he could create a PE of the overseas consultancy business.
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