Just met a prospective new client.
Original enquiry was that he was a German national; resident in UK since August; trading as sole practitioner in a business which does specialist design/specification/project implementation in connection with the construction industry. Clients are in Germany, UK and occasionally Spain. I won't say precisely what the business is but relates to leisure/sporting facilities/fixtures which may be fixed to the inside or outside of a building or even free standing structures outdoors.
Apart from needing to register with HMRC as self employed, client wanted to register for VAT as his main German customer was insisting he needed VAT number on the invoices and was looking for help/advice to do this in UK. Hving quizzed him as well as I was able, having very little german and his English not being perfect, I believe that the services he provides are 'related to land' and therefore the place of supply would be where the his customer belongs (later confirmed on the phone with HMRC). Projected turnover is around €50k to €60k so he would not need to register in UK, but would in Germany where he would be required to register as a non-resident trader before making supplies. I imagine this is the VAT number the German customer wants on the invoices.
After we get to this stage, he then tells me that he was trading as a GmbH in Germany until a year or so ago but was facing tax demands because of a very good year in 2008 where he had to pay €40k. It appeared from his imperfect English, that the German tax authorities were demanding the same level of tax for 2009, 2010 and 2011. He asked whether it would be possible to set up a UK company with an accommodation address and nominee directors/shareholders. He explained that if he only had a modest salary and was unable to pay the tax owed in Germany, the debt would be wiped out in seven and a half years.
I'm assuming this would be the result of him being declared bankrupt (or the equivalent) in Germany.
The original contact came from a lady who provides translation services to the prospect. She said she was trying to find an accounancy firm to take him on, but although he had approached a few larger firms there had not been any willing to take him as a client an she couldn't understand why. I suspect she didn't know of the scheme to dodge his German tax debts!
I won't be taking him on either! BUT I did just wonder, if he hadn't mentioned the German Tax situation, and I had taken him at face value, would there have been any AML pitfalls in what he proposed.