UK company with overseas employee/worker

Can anyone share any issues

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Hi all - can anyone share some thoughts on this.

UK company has an employee - who has moved overseas - perm with no intentions of moving back to the Uk. They have already had their first overseas tax return declaring them as tax resident. 

When the employee moved - the employer amended the employment contract that the employee will be required to attend the uk at points during the year to complete work and this will be run as UK PAYE. (This will be under tax and NIC rates) 

The employee has set up as self employed in their new country - has a tax advisor etc and will continue completing work for the UK company as self employed. They will be responsible for their own time management - use their own equipment etc 

This way the UK company does not operate an overseas payroll and the sub-contractor is legitimately declaring taxes and paying national insurance in their new country as self employed.

On the face of it it all seems to be ok - uk work declared under Uk PAYE - overseas work declared under self employment - but can anyone foresee any issues with this that I am missing?

Could be a case for permanent establishment overseas possibly? Anything else

Replies (3)

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By David Ex
15th Nov 2023 20:19

PALacc wrote:

Could be a case for permanent establishment overseas possibly?

Seems unlikely but think you’d need to understand the employee’s role.

This is an HMRC definition:

https://www.gov.uk/hmrc-internal-manuals/international-manual/intm332610

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By AK Employment Tax Services
16th Nov 2023 08:01

It would depend in which country the people concerned are working. The rules in many European countries are different to the UK and the worker cannot simply consider themselves self employed there are certain rules which need to apply. If the worker is an employed worker then in many countries it is a requirement of the country concerned that the employer must be registered and responsible to account for tax, social security and in some cases pension. I suggest the client concerned needs to find an adviser in the country concerned to get this sorted correctly. It is wrong that the person is still paying UK tax and National Insurance. although in some instances the NI could still be collected if a A1 certificate is in place

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Caroline
By accountantccole
16th Nov 2023 11:15

If the relationship is employee/employer, then the individual should probably be employed on a local contract and paid as an employee in that country.
France, for example would see it as an employment, and it is not permitted for a sole trader to only have one customer for this reason.

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