US company wants to hire UK employee/contractor

[tomn68]

I run a small software company in the US. We sell software online globally and actually have some product on the shelves of a few UK computer stores.

We're looking to add a new developer and found someone in the UK who would be a really good fit.

I actually have two questions. First, we're looking to hire this person full time but my concern is that this will create a UK presence for us from a tax standpoint. Would having a UK employee working from home require us to start worrying about VAT and more importantly our company paying UK income tax.

Second question is if having this person work as self-employed or a contractor solve any issues or create more?

It would be a shame if we couldn't work with this developer (who is looking for work) if suddenly our overall costs of hiring triple+ because of all of the tax implications.

[DickM]

If the person you want had his own Ltd Co., and his turnover was below £66K (the UK HMRC VAT threshold is around this figure) - then all your concerns would disappear ............ hopefully :)

[tomn68]

Thanks for the reply! So if this Ltd company receives a majority of their revenue (if not all) from our company I think this means IR35 comes into play.

I'm just learning about IR35 but I think this means that our company may have to pay our share as if this person was an employee and the developer would have to pay their taxes as if he was an employee. This is fine given we're not trying to get around that but just don't want to create a UK presence which makes this much more complicated (and probably expensive) when we're just trying to hire one person. Am I understanding that correctly?

Thanks