Paying to someone abroad

[Paidpal]

Hello

At some point I will need to pay some amount of money to the person that has done the work for me, and that person happened to live in non EU East European country. This person probably will not be a sole trader or any official body.

I have Ltd.

How it's done? Do I need to go through yet another sophisticated process, or transfer the money, ask the person to send me the invoice (I can even prepare it for him), and job done, so that HMRC will be ok with it should they want to investigate financial status of the company?

Cheers!

[Truemanbrown]

You should ask the person involved to supply you with a purchase invoice.

[Tom McClelland]

Is the person an employee who happens to live abroad, or a contractor or supplier? The answer may depend on that. Conceivably you're an employer of that person in their own country and liable to pay whatever employment taxes are appropriate there. Just as a foreign entity that employed a UK citizen here would be liable to UK PAYE/NI regulations.

Possibly everything is fine and the overseas person can just send you an invoice that you pay in any mutually agreed way. But be slightly careful that you aren't breaking their country's law.

[Paidpal]

You should ask the person involved to supply you with a purchase invoice.

There's no purchase, I literally need to find few skilled employees, but have no time to look for them myself, so I want to use someone's free time to do that for me.

And once I interview and agree for the person that has been sent to me by him or her (ie "someone abroad" as mentioned in the topic title), then I want to pay him.

In that case that's when I should request the invoice for agreed amount, and it's not my problem if the person is the student, sole trader, contractor or director of his own ltd, as long as I am fair with HMRC?

[Paidpal]

Is the person an employee who happens to live abroad, or a contractor or supplier? The answer may depend on that. Conceivably you're an employer of that person in their own country and liable to pay whatever employment taxes are appropriate there. Just as a foreign entity that employed a UK citizen here would be liable to UK PAYE/NI regulations.

Possibly everything is fine and the overseas person can just send you an invoice that you pay in any mutually agreed way. But be slightly careful that you aren't breaking their country's law.

The person is... I have no idea who really, please look at my previous post above, the person can be anyone from student to director of ltd...

What do you mean by breaking their country's law?

Thanks

[Tom McClelland]

What do you mean by breaking their country's law?



You just need to think about the situation in reverse. Supposing you were in Moldova (country plucked from the air for illustrative purposes) running your Moldovan company and you employed someone in GB to do work for you. If that person met the usual HMRC tests for employment you'd be breaking British law if you didn't register as an employer, deduct PAYE and NI, add employers NI, pay holiday pay, etc. The fact that as a Moldovan you'd be unaware of the intricacies of UK employment law and perhaps you wouldn't even have the language skills to read the various HMRC pamphlets and website pages on the subject would be completely irrelevant and no excuse as far as UK law is concerned.

You've even used the word employee in this thread to describe your relationship with these foreign workers. So you would (in theory) be liable to respect whatever employment law applies in their country. Maybe you'd get away with ignoring all that... and maybe not.

Bottom Line. If you deal with people in foreign countries you need to understand how the authorities in those countries might view your dealings and what taxes might apply, and what other laws might apply. It wouldn't be a defence to say, "I don't know what the legal situation is".

[Paidpal]

You just need to think about the situation in reverse. Supposing you were in Moldova (country plucked from the air for illustrative purposes) running your Moldovan company and you employed someone in GB to do work for you. If that person met the usual HMRC tests for employment you'd be breaking British law if you didn't register as an employer, deduct PAYE and NI, add employers NI, pay holiday pay, etc. The fact that as a Moldovan you'd be unaware of the intricacies of UK employment law and perhaps you wouldn't even have the language skills to read the various HMRC pamphlets and website pages on the subject would be completely irrelevant and no excuse as far as UK law is concerned.

You've even used the word employee in this thread to describe your relationship with these foreign workers. So you would (in theory) be liable to respect whatever employment law applies in their country. Maybe you'd get away with ignoring all that... and maybe not.

Bottom Line. If you deal with people in foreign countries you need to understand how the authorities in those countries might view your dealings and what taxes might apply, and what other laws might apply. It wouldn't be a defence to say, "I don't know what the legal situation is".


In other words, the best thing is to have contract between me as a Ltd and that person, so that I don't have to worry about PAYE, NI and all bureaucracy, and all I'd need to do is to transfer the money on that person's account and job done.

Do you know what's the name of such contract, as I believe I'm not the first person in the UK that is doing it, and probably there is tens of templates in internet, I just need to name it?

[maxh]

Invoice, then tax etc.. is their problem.

[Paidpal]

Invoice, then tax etc.. is their problem.


So all I have to do in that case is to receive invoice from them as a private person for my company, pay them agreed amount and that's it?

Can I use regular invoice template for that, or some jedi-mind-trick-invoice is required?