Self-Employed living and working abroad - Legality

[siki]

This is something I have been trying to get a straight answer to, but neither HMRC nor accounting companies could give me a straight answer. Hope somebody can direct me in the right direction as I would like to do everything by the book, making sure I am not braking the law. My situation:

Self-Employed in the UK (IT, so I can do my job remotely)
Currently working and living abroad (Middle-East) with full-time employmener (Middle-East).

Dilemma: can I live and work in Middle-East (or anywhere in the world) and have my SE status in the UK. Some sources say, that I have to be physically in the UK to be SE but it's not clear if I am breaking the law or not with this. I am still doing my yearly Tax-Return pay my NINO and have a physical address in the UK. If I am breaking the law the next step would be to become LTD, but I would like to avoid this as I do not have more than 7000GBP income per year which doesn't warrant an LTD.

Hope I covered all the details needed, if not please feel free to ask.

Thank you in advance for any input.

Regards,
S

 

[Scalloway]

It depends on your tax residence

https://www.gov.uk/tax-foreign-income

 

[UK Contractor Accountant]

What are you putting on your UK Tax Return regarding your foreign earnings?

As far as HMRC are concerned your are still UK Resident so you should be declaring your worldwide income on your Tax Return with appropriate reliefs claimed.

 

[Newchodge]

You can undertake self employed work for UK contractors from anywhere in the world. How you pay tax on your different earningswill depend on where you are resident for tax purposes, as Scalloway says.

 

[Highland Spring]

Sounds like an ideal arrangement, I've had a number of internet businesses which in theory could have been run from any global location, but having a wife and kids I am based in Telford - though happy about it (the kids and wife part) - Bahamas would be nicer though... Can't get the wife to think that way though

 

[siki]

Thank you all for your replies, it did actually help me to get more clarity.

I haven’t been resident in the UK since 2016 September 4th. This means I won’t have to include my foreign earning in the 2017-2018 Tax Return. However, my concern is if I am operating legally in not being a resident.

My work is website and seo consultant and have clients around the world. I invoice them with my registered address in the UK (which belongs to a good friend). All income/ expenses go through my UK bank account and file my tax-returns regularly.

My confusion lies within HMRC not being able to give me a ‘yes’ or ‘no’ answer. Would I need to incorporate a LTD to operate legally, or is my current situation enough?

Thank you in advance.
Regards,
S

 

[Scalloway]

I invoice them with my registered address in the UK (which belongs to a good friend). All income/ expenses go through my UK bank account and file my tax-returns regularly.

If HMRC regard you as non resident for UK tax you may still need to pay UK tax on your UK earnings.

https://www.gov.uk/tax-foreign-income/residence

 

[siki]

Hi Scallaway,

Thank you for your reply. My questions isn't regarding if I need to pay or not on my earnings (as it's self-explanatory that I need to, and as I mentioned above am already paying it).

My questions is referring to the legality of my status/ situation.

Regards,
S

 

[Scalloway]

As long as you pay the correct taxes it should be legal.

 

[UK Contractor Accountant]

You are are not carrying out self-employed activities within the UK so the answer to your question is no you are not currently operating correctly for UK taxes - you need to register and declare your SE income in the Country you are Resident.

 

[Adam93]

Agree with UK Contractor Accountant.

You are not self-employed in the UK so unless you have any other UK income (such as property income) you shouldn't be filling a tax return in the UK. I dare say you are filling a tax return each year at £7000 income so you qualify for your state pension and at the same time pay no UK tax and national insurance which most definitely is fraudulent - otherwise everyone would do this and everyone in the world would get a UK state pension - they do not make it that easy I am afraid, and understandably so!

Even if you set up a limited company, as you are resident in the middle east somewhere, that limited company will have to set up a payroll scheme in that country and not the UK as it will have no UK employees, just an employee in the middle east - so it would also be fraudulent to process a salary through the UK PAYE scheme via a limited company.

If I am correct with the state pension qualifying years issue, which I assume is the case, you will have to look at Class 3 voluntary contributions if you want to remain law abiding but even this may not be possible. The UK state pension is designed for the benefit of UK resident individuals with 35 qualifying years.