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UK client moving all book-keeping, payments and tax work to US

UK client moving all book-keeping, payments and...

Just received a call from a director of my UK client whose head office in US.  They have a company in the UK

Their rather eccentric US owner has decided the following

1) All book-keeping, payroll and tax work to be done in US

2) They are going to shut the UK bank account down and all transactions will be made from the US bank Sterling Account.  The UK Customer will pay into the US bank account.  The UK director was concerned that are there any regulations or possible breaches that he should be made aware of/

3) Invoices will be made from the US Company

I don't believe there is an issue with point 1 or 2 since they may appoint a global agent. However with point 3, the process at the moment is the UK company invoices the UK client for IT services rendered.  The Work is undertaken in the UK on the company premises. The supervision and management of the project is undertaken in the UK.  I have issues over VAT and Corporate Tax as the US entity is just acting as billing hub and VAT should be charged. 

If the US office changes the entity on the contract to US and the contract is signed by a US owner.  The Resources are sent to work on UK customer premises by the US offices.  I suspect there will be no PE and no corporate tax payable ?

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13th Dec 2012 12:59

size and (lack of) complexity matters.

on the presumption that the service provided in the uk is provided to another business(i.e. B&B)

invoices will have to be raised/issued from a uk address so the customers can recover vat.

 

otherwise as you say the uk body/operation will have to pay/charge vat to the registered holding company in the US.

 

the maintenence of the ledger/books could be done anywhere(as nowadays this is often done offshore if the pracaticalities are easier) 

payroll for any uk staff could only be done in the US if the usco was employing the staff as contractors to the uk operation. the uk operation should have a payroll scheme but with RTI he might be keen not to have it.

"The Work is undertaken in the UK on the company premises. The supervision and management of the project is undertaken in the UK.  I have issues over VAT and Corporate Tax as the US entity is just acting as billing hub and VAT should be charged."

 

closing a company bank account and ceasing trading in the uk to do so in the us with uk customers although practically possible is always an "act in haste repent at leisure" recourse and would have far wider complications than just the tax consequences.

  

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