Contracting for a Canadian Company while based in UK

[arbhatti]

Hi,
I am UK tax resident but I will be potentially contracting with a Canadian company (that has no presence in UK) from home. My work will involve frequent travelling and working in China (company will pay all the airfares, rent, and set daily amount for meals).
I am new to contracting and not sure how will it work? Can anyone advise me what are my options?
It will be much appreciated and it will help me negotiate the contract.
Thanks and Regards,

 

[Merchant UK]

Your options for what?

Either you take the job or not? You just need to make sure that you have a contract of some sort which is signed by both the company and you detailing exactly what's paid for and what can be claimed as expenses by you.

Will you be aboard longer than your in the UK?

When you say you will be contracting, does that mean you will set up a Limited company? and the company is contracting for the job or will you just be self employed working for yourself?

 

[arbhatti]

Your options for what?

Either you take the job or not? You just need to make sure that you have a contract of some sort which is signed by both the company and you detailing exactly what's paid for and what can be claimed as expenses by you.

Will you be aboard longer than your in the UK?

When you say you will be contracting, does that mean you will set up a Limited company? and the company is contracting for the job or will you just be self employed working for yourself?

Yes, there will be formal contract signed by both parties. I will 60% of my time in UK and 40% abroad. This is the question whether I should set up a limited company or should go for self-employment? Let's say if I go for the option of Ltd company, will I be inside or outside of IR35? And will this kind of arrangement be ok with UK and Canadian authorities?

 

[Merchant UK]

Will you as a limited company be looking for further work or contracts? Would you be in a position to employ staff to fulfill these extra contracts. if you set up a Limited company and Plan it in such a way that your client in Canada is just one of your clients as opposed to the only one, then i don't think you'll have much trouble with the IR35.

Its pretty common that limited companies spend a considerable amount of time with one client, but you need to show that you are also actively seeking new clients for your business, ie setting up a company website, targeting similar businesses, etc..

I would imagine as you'll be registered in the UK and Paying any tax earn in the UK, i don't think the canadian Tax authority would have much say in the matter, just set up a limited company with you as the director, and set yourself up as an Employee of your company, register with the revenue for PAYE its that easy

 

[arbhatti]

Will you as a limited company be looking for further work or contracts? Would you be in a position to employ staff to fulfill these extra contracts. if you set up a Limited company and Plan it in such a way that your client in Canada is just one of your clients as opposed to the only one, then i don't think you'll have much trouble with the IR35.

Its pretty common that limited companies spend a considerable amount of time with one client, but you need to show that you are also actively seeking new clients for your business, ie setting up a company website, targeting similar businesses, etc..

I would imagine as you'll be registered in the UK and Paying any tax earn in the UK, i don't think the canadian Tax authority would have much say in the matter, just set up a limited company with you as the director, and set yourself up as an Employee of your company, register with the revenue for PAYE its that easy

The thing is that I am currently working for a canadian company that has UK office but they are planning to sell the UK business but management wants to take me with them. So I am stuck where I cannot get paid through UK anymore and they are asking me to go on contract!

 

[Merchant UK]

The thing is that I am currently working for a canadian company that has UK office but they are planning to sell the UK business but management wants to take me with them. So I am stuck where I cannot get paid through UK anymore and they are asking me to go on contract!

So they pay your Limited Company, all they would need is your limited company Bank details and they can pay you from wherever they are in the world. Then in turn you would pay yourself into your personal account. Going on contract don't make things harder, if anything its more flexible

 

[arbhatti]

So they pay your Limited Company, all they would need is your limited company Bank details and they can pay you from wherever they are in the world. Then in turn you would pay yourself into your personal account. Going on contract don't make things harder, if anything its more flexible

what is the risk of me being inside IR35?

 

[Merchant UK]

what is the risk of me being inside IR35?

if you use this company as your only client and you do nothing to look for other work, if you just want to work as an employee why don't you still stay as you are? They can continue to pay your wages to your UK personal account, Is there a problem with that?

You can see here for more info http://www.hmrc.gov.uk/employment-status/#1

But if you become a limited company then IR35 wouldn't come into it as your only an employee of your own Limited company and not your clients

 

[arbhatti]

I really appreciate your time and comments as I think we are getting closer to the conclusion....If the company only has presence in Canada but not in UK, can they still keep me as an employee and pay my wages to me in my personal account (after UK tax deduction etc.)?

 

[Merchant UK]

I really appreciate your time and comments as I think we are getting closer to the conclusion....If the company only has presence in Canada but not in UK, can they still keep me as an employee and pay my wages to me in my personal account (after UK tax deduction etc.)?

The best way would be if you set yourself up as a limited company, Then they just pay your invoice, then your company pays you, so you deal with the paye and NI etc. that would be the best and easiest way, I don't think they will be too happy having to do your UK tax etc from canada.

with a Limited company they just pay your invoice like any other invoice

 

[arbhatti]

The best way would be if you set yourself up as a limited company, Then they just pay your invoice, then your company pays you, so you deal with the paye and NI etc. that would be the best and easiest way, I don't think they will be too happy having to do your UK tax etc from canada.

with a Limited company they just pay your invoice like any other invoice

ok, i get it. so if they are happy to calculate the tax etc., i should let them do it and get the Net Pay paid into my account (as today) but otherwise me getting the salary is only getting paid through limited company, is this right? or is there a way that a canadian company can have and pay its employee in UK without having any sort of presence in the UK?

I am just trying to find out the best and the easiest way as I have meeting setup with CEO later this week. He is Canadian so he may ask me the question!

Thanks

 

[Merchant UK]

Your best bet is start up a limited company and just invoice the company each month for your wages, they will pay your wages gross. The money goes into a limited company bank account and then you pay yourself from that account.

They will not deduct tax and NI for you because they are in canada. You need to pay your own Tax and NI dependant on how much wages you decide to pay yourself.

As a limited company you just send them an invoice each month and they pay that in full

 

[David Griffiths]

But if you become a limited company then IR35 wouldn't come into it as your only an employee of your own Limited company and not your clients

That is completely incorrect and shows a complete misunderstanding of what IR35 is about.

The IR35 provisions only operate where services are supplied through the taxpayers personal company.

As to whether the OP's position would be caught by IR35, I wouldn't begin to express an opinion because there is simply not enough information to do so. Every case turns on its own facts, and making generalisations about employment status is of no use at all.

 

[arbhatti]

Your best bet is start up a limited company and just invoice the company each month for your wages, they will pay your wages gross. The money goes into a limited company bank account and then you pay yourself from that account.

They will not deduct tax and NI for you because they are in canada. You need to pay your own Tax and NI dependant on how much wages you decide to pay yourself.

As a limited company you just send them an invoice each month and they pay that in full

what will I do about expenses? should i claim them through company's system? how will they be paid in ltd company account or personal?

 

[Merchant UK]

what will I do about expenses? should i claim them through company's system? how will they be paid in ltd company account or personal?

All your expenses should be done in the limited company name