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Foreign nationals, working overseas, paid via UK company..tax/ni/vat implications

Foreign nationals, working overseas, paid via...

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The company I am dealing with have foreign nationals working for foreign clients in foreign climes (not necessarily their own native foreign country).
The workers will never be setting foot in UK. for example, an Italian worker, recruited to work for a foreign company in say Turkmenistan (thinking non-EU country here)

Can anyone please point me towards guidance for dealing with reporting payments (they must appear on the TIDO reports) and tax/NI liabilities if they are a non-limited type worker?

I have waded through the plethora of HMRC references to overseas workers in UK and UK workers overseas and lots of other combinations but nothing which seems to cover the probable circumstance of foreign paid through UK but remaining overseas.

Many thanks in advance.

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By Euan MacLennan
25th Nov 2009 14:38

What is the question?

Are you asking about the PAYE/NIC/VAT liability?  If so, you do not need any guidance dealing specifically with foreign nationals working in foreign countries - just stick to the basic UK position:

Are the workers resident in the UK in any way?  No - so not subject to UK tax and hence, PAYE, on that account.

Do the workers do any work in the UK?  No - so not subject to UK tax and hence, PAYE on that part of their earnings.

Are the workers present in the UK?  No - so not subject to UK NIC.

Does the company invoice foreign companies for the supply of consultants or staff?  Yes - the place of supply of the services is in the customer's country and so, is not subject to UK VAT.

However, the worker may be subject to tax and/or social security contributions in the country where they are working and the UK company may have to make arrangements to deduct and pay over the foreign tax.

 

Or are you just asking about reporting requirements?  I have no idea what a TIDO report is, but the standard procedure would be to include salaries paid by a UK company to non-residents from whom no tax or NIC has been dedcuted on a form P38 attached to the company's annual PAYE return, form P35.

 

P.S.  What is a non-limited type worker?  A service company?

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By alan.falcondale
26th Nov 2009 08:58

much clearer

Many thanks for prompt reply Euan,

Are you asking about the PAYE/NIC/VAT liability? 

- Yes, and thanks for the detailed reply.

However, the worker may be subject to tax and/or social security contributions in the country where they are working and the UK company may have to make arrangements to deduct and pay over the foreign tax.

- agreed, local witholding tax and the like are accounted for at rate level.

Or are you just asking about reporting requirements? 

- no, it's the processing of payments, which is now clearer thanks

I have no idea what a TIDO report is

- form 46G for payment to companies reporting to HMRC

but the standard procedure would be to include salaries paid by a UK company to non-residents from whom no tax or NIC has been dedcuted on a form P38 attached to the company's annual PAYE return, form P35.

- agreed

P.S.  What is a non-limited type worker?  A service company?

- yes/no, was referring to PAYE type person but overseas or overseas inc company

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