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UK Company but living and working abroad

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I have a client who moved to another EU country a few years ago and now generates all of his company's income in that country.

He currently uses his UK Ltd company to declare income/pay tax. (No PAYE involved)

Am I right in saying that he should now regsiter in that country and that his UK company should be closed?

Might be a simplistic question but happy to provide any other details

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07th Aug 2019 17:42

There is no immediate need to close the company although it may make things simpler in the long run, but your real issue is that he may well have been incorrectly declaring and paying UK tax when the company is not resident for UK tax purposes. Although there is not enough information in your post to be definitive on this, you may need to amend his past CT returns to nil returns since it is very likely that the company is taxable in his country of residence and not the UK. When the tax authorities from that other country come calling for their dues it would be a shame if he had already given the money to the UK by mistake, as they are unlikely to accept any tax credit under a DTA where tax has been incorrectly levied.

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07th Aug 2019 17:52

Thanks for the reply.
Tax will not be an issue because the company has accumulated losses and no tax paid for the past 4 years

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to jaffe123
07th Aug 2019 18:03

jaffe123 wrote:

Thanks for the reply.
Tax will not be an issue because the company has accumulated losses and no tax paid for the past 4 years

Are you sure the historic accumulated losses are allowable against the trade under the tax rules of his country of residence? Tell him to get local advice before making that assumption.

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07th Aug 2019 18:32

Face, this is palm. Palm, meet face.

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08th Aug 2019 06:44

Why did you mention the tax if it's not an issue? Why didn't you mention Brexit if that's what you were asking about?

FYI, folk in here know about tax - the rules get written down and then applied. (Or not, apparently, in your client's case... not yet, anyway.) None of us knows what Brexit will do.

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to Tax Dragon
08th Aug 2019 09:49

Absolutely nothing to do with Brexit. Just my lack of knowledge of someone having a UK company but working and generating the income in a different country.

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to jaffe123
08th Aug 2019 10:10

Can you can see why I made the link?

Your client moved a few years ago. You should have been concerned about your lack of knowledge at the time.

I hope you at least advised your client when they moved that you would not be able to provide tax and accounts services for (or advice on other obligations in) their adopted country of residence and that they should take advice locally; I seriously hope you did not advise them to the contrary.

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to Tax Dragon
08th Aug 2019 18:17

I am very comfortable with what has happened in the past and my knowledge of the circumstances at that time but circumstances have now changed hence my question.

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By Matrix
to jaffe123
08th Aug 2019 20:45

I thought they changed a few years ago so you should have advised the client to seek local tax advice at that time.

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08th Aug 2019 07:08

The company is registered in the UK so It's UK resident and liable to UK taxes. If your client is using it to trade (from anywhere in the world) then the profits generated are liable to UK tax.
Don't confuse your clients tax status with that of the Ltd Company, they are separate legal entities.
The question is this, does he appear to be sheltering his income in a relatively low tax regime to avoid local taxes and will the local tax authorities get a bit worked up if they find out?
It's like someone registering their company on BVI and trading through it, HMRC will be upset, the same goes for the country he is in.

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to Richard Grant
08th Aug 2019 09:13

If the company is also resident where it's run (quite a common rule) and there's a DTA between there and the UK... have a look at TIOPA. (And s18 CTA2009, for CT.)

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to Richard Grant
08th Aug 2019 18:23

Many thanks for your reply. Based on the tax structure where he now lives there is no tax to pay for the past few years (same as UK) but my concern is that all his income for this current year is in the new country and none from UK. I suspect the company will also start to make a profit this year.

Based on some of the more sensible answers on here I have now advised him to find a local accountant

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to jaffe123
09th Aug 2019 12:28

Just to make sure he isn't exposed to anything in the UK, I'd suggest he should engage a competent adviser over here too.

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08th Aug 2019 09:13

UK Limited company isn't the issue, no problem with non residents still having a UK co. (can be useful for tax planning, particularly if they go to the UK from time to time). The problem is that the client has probably created a branch.
Getting a branch set up properly overseas can be more complicated than you expect.
We're in France and deal with lots of UK/French clients. There are horrible local rules for building trades/artists/transport companies etc. Your client definitely needs local advice.
If they are on UK passports and haven't got themselves into the local system properly, they may well need to back track and declare properly to Brexit proof themselves. Quickly!

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08th Aug 2019 10:29

Oh, god. As if the OP isn't bad enough. Then the idiots turn up, and make the whole situation worse. Yes, I mean you. You know who I'm talking about.

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