Based in Ireland, UK client

S

stevep

Guest
Hi,

I will discuss this with an accountant but wanted to get some guidance here if possible first. I am thinking of taking a job with a UK based company. They are happy for me to spend 3 days per week in their office (or out with their clients) and two days working from home here. I was planning to setup a LTD company here and invoicing them through that.

I would be paying for my own travel and accommodation to London for the 3 days per week. Am I correct to assume I can expense the travel/accomodation/subsistance for my visits to the UK from gross income and then pay myself a salary from the remainder (probably with some other business costs such as phone/broadband deducted etc)?

I would be fully tax resident here based on the number of days in the country so I am assuming that I (and they) would have no UK tax liabilities as it is basically an Irish company providing a service to a UK company?

Thanks for any input you can provide
 
You need to consider the implications of possibly having the company becoming UK tax resident, and liable to UK corporation taxes, if you are a director and become UK tax resident.

There are special tax rules (IR35) for UK companies providing services, and you may fall under that.

The Irish company that you set up will have Irish PAYE obligations for your salary - and also will have obligations to operate UK PAYE.

This is a complex area, and you need to consider UK tax issues in addition to Irish tax issues.
 
You would need to discuss with your accountant whether the concept of a "permanent estalishment" might arise in UK due to the nature of your business activities there. If a permanent establishment arises, the Irish company maybe required to submit UK tax returns. A permanent establishment can include an office or other place of management or a branch of your business, amongst other things.
 
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Domo said:
You need to consider the implications of possibly having the company becoming UK tax resident, and liable to UK corporation taxes, if you are a director and become UK tax resident.

There are special tax rules (IR35) for UK companies providing services, and you may fall under that.

The Irish company that you set up will have Irish PAYE obligations for your salary - and also will have obligations to operate UK PAYE.

This is a complex area, and you need to consider UK tax issues in addition to Irish tax issues.
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Thanks Domo. If I was spending sufficient time in Ireland to be tax resident here and was only in the UK two nights per week on average at either the client site or out with their customers would I still have to operate UK PAYE as I would essentially be an employee of my Irish company who visits the UK customer?
 
FENERO said:
You would need to discuss with your accountant whether the concept of a "permanent estalishment" might arise in UK due to the nature of your business activities there. If a permanent establishment arises, the Irish company maybe required to submit UK tax returns. A permanent establishment can include an office or other place of management or a branch of your business, amongst other things.
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Thanks Fenero. I will discuss with an accountant as you suggest. I would be travelling to my clients office and their clients offices so would not have any base for my own company in the UK.
 
Having looked through HMRC rules on tax residency I have one more quick question that someone may be able to answer. Assuming I do not spend more than 91 days per year in the UK (based on the fact that I would be there 3 days per week but the days of arrival and departure do not count towards number of days resident) the company should not become "permanently resident" through my own director tax residency status would this mean that the company would not become resident? It would not have any sort of company office there either, just me at the client site or other locations.

Many thanks and I will of course seek professional advice on this should I proceed but just want to get a handle on basic principles first.
 
The 91 day rule, as a concession, allows days of arrival and departure to be excluded, but this is only a concession.............. HMRC have the right to take these days into account if they feel the concession is being abused.

The permanent establishment issue would be separate from your personal residence, and will depend on where management and control of company is held, and where contracts are concluded in addition to other factors.
 
Domo said:
The 91 day rule, as a concession, allows days of arrival and departure to be excluded, but this is only a concession.............. HMRC have the right to take these days into account if they feel the concession is being abused.

The permanent establishment issue would be separate from your personal residence, and will depend on where management and control of company is held, and where contracts are concluded in addition to other factors.
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Thanks again. This is clearly going to be a complex setup and yet one that I assume many people, in increasing numbers, may find themselves facing when they are working cross-border like this due to lack of opportunities locally in the current economic climate. I guess the bottom line is that its doable, although messy, if the numbers work.
 
Hi Stevep

Actually , Its not as complicated as you might believe

1) You personally will be tax resident in Ireland spending around four days per week here.

2) If the directors of your new Irish company are Irish tax resients, then the company will almost certainly be tax resident in Ireland paying Irish corporation tax on any profits

3) Your new Irish company will register for PAYE and deduct PAYE from your salary

4) The Irish company will invoice the UK company for your services
however there may be a need to charge vat on that portion of your services that are provided in Ireland (the 2 days per week) You will need to look into that. That portion of your work that takes place outside of Ireland will be outside the scope of Irish vat.

5) Your subsistance and travel expenses should be fully tax deductable from gross profits of the Irish company provided they are "wholly and exclusively necessary" for carrying on your business

I hope this helps
 
Unfortunately it is not really that simple.

A company who has an employee working in the UK for 60 days or more a year is obliged to operate UK PAYE in their income - this will be in addition to Irish PAYE, although you can apply to operate a "modified" payroll in the UK.

If the company has the majority of directors resident in Ireland, and ALL management and control is carried out in Ireland then the company is likely to remain Irish resident. However, if you are a director of your own company, and working in the UK, it may be difficult to substantiate that all management and control is carried out in Ireland, but you can take advice on that. Even sending an email regarding the corporate management issues while in the UK could be percieved as management and control being carried out in the UK.

I spent 5 years in the UK working on these types of issues and I know that they are complex. Also, I am coming across these types of issues more regularly here in Ireland now as many people in Ireland physically carry out work/self-employment in the UK and Northern Ireland (and other countries) due to globalisation, and don't realise the complexity of what they are doing.

I would estimate that about 50% of my client have cross-border issues.
 
Importer, I like your answer best! But it sounds like it could be a bit more complicated based on Domo's comments...

Domo, where a dual PAYE system needs to be operated as you described does this mean you actually pay twice as much PAYE or is it just that its split between both tax authorities (with more administrative costs presumably)?

In general it seems that whatever the complications on my side the client is not impacted by any of this?
 
stevep said:
where a dual PAYE system needs to be operated as you described does this mean you actually pay twice as much PAYE or is it just that its split between both tax authorities (with more administrative costs presumably)?
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The Double Taxation Agreement between Ireland and the UK should ensure that in the main you are not taxed on the same income twice e.g. you could get a tax credit in Ireland for tax already paid in the UK.
 
As above, the double tax agreement means you don't pay double tax, but you might suffer a cashflow problem during the year while PAYE is operated in both countires.

Also, there would be quite a lot of administration to operate.

Speak to an advisor - it may be worth your while being self-employed to avoid a lot of issues, rather than operating through a company - but you need to crunch the figures.
 
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