Contracting from France to UK company

[mike 0]

Hi all, I'm new here and new to contracting and have a few noob doubts and questions. (and possibly some wrong assumptions)

I'm going to move to France later in the year and I'm going to start working with a contract for a UK based company - maybe start with 1 year with the possibility of extending it. I contacted a few companies (Access Financial, umbrella match, compare the umbrella) regarding how to do the financial setup and I'm not entirely sure if the proposals I got back are legal or not.

One of them used growth shares for a portion of the payment as a mean of avoiding income tax (paying CGT instead), which from what I read is an avoidable tax evasion scheme.

The other suggested I create my ltd company in the UK with a low salary and get the rest through dividends. Not sure why this would be more legal than the solution above, but from what I read this seems to be common practice?

I am a bit confused with all the information received so I thought I would reach out to you guys and maybe someone has gone through a similar situation or knows how this works. So here are some questions:

1. Can I live in France and do my finances through a UK limited company and pay my taxes in the UK or would I be liable to pay french tax and national insurance too?

2. Has anyone worked with Access Financial Services? Any good/bad experiences?

3. What kind of setup you think is better for a situation like this? Setting up a company in the UK? Setting up a company in France? Working through an umbrella in the UK? (is this even possible?) Or working through an umbrella in France (called portage salarial)?

Thanks in advance.

[NotAllThere]

Look over there: --------------------------------> Now read "First Timers".

Done that? Good.

One of them used growth shares for a portion of the payment as a mean of avoiding income tax (paying CGT instead), which from what I read is an avoidable tax evasion scheme.

Do not touch.

The other suggested I create my ltd company in the UK with a low salary and get the rest through dividends. Not sure why this would be more legal than the solution above, but from what I read this seems to be common practice?

It's firmly established as permitted. "Schemes" rely on an interpretation that hasn't been tested in the courts.

1. Can I live in France and do my finances through a UK limited company and pay my taxes in the UK or would I be liable to pay french tax and national insurance too?

Probably not. As a principle you pay tax and social contributions in the country you live in - your tax residency. If you spend too much time in the UK, you may become liable for tax there. See here for a detailed discussion and useful links: https://www.contractoruk.com/forums/...d-company.html

2. Has anyone worked with Access Financial Services? Any good/bad experiences?

See here: https://www.contractoruk.com/forums/...-services.html

3. What kind of setup you think is better for a situation like this? Setting up a company in the UK? Setting up a company in France? Working through an umbrella in the UK? (is this even possible?) Or working through an umbrella in France (called portage salarial)?

Set up a company in France, or work through a brolly in France.

[BlasterBates]

You will be resident in France but if you commute to the UK on a weekly basis for example then you will be liable for tax on your UK earnings in the UK regardless of whether you're resident there or not. In this case working through a UK company would be fine. You then have to declare your earnings in France as well, as that will be your main residence. The French tax authorities will take into account tax paid in the UK.

If you work remotely in France then you shouldn't work through a UK Ltd, you need to be self-employed in France. There will be no UK tax to pay.

You do not have a choice as to where you're taxed it will be decided by the rules, i.e. where you work.

[mike 0]

Thanks for the replies so far.

OK, so looks like I should run away from growth share schemes and from Access Financial too. That's progress!

Quite a few people I asked suggested I just create my UK company and pay myself a UK salary (and respective tax and NI) and dividends, saying that it doesn't matter where I work from, which leaves me a bit confused. If I can rule out this option as not legal, at least I'll be one step further to finding out what's the best setup.

With regards to the contracts, I'm going to start with a 1 year contract with the possibility of it being renewed. Is this likely to cause any problems? (e.g. may be viewed as a disguised permanent employment?)

[Fred Bloggs]

Thanks for the replies so far.

OK, so looks like I should run away from growth share schemes and from Access Financial too. That's progress!

Quite a few people I asked suggested I just create my UK company and pay myself a UK salary (and respective tax and NI) and dividends, saying that it doesn't matter where I work from, which leaves me a bit confused. If I can rule out this option as not legal, at least I'll be one step further to finding out what's the best setup.

With regards to the contracts, I'm going to start with a 1 year contract with the possibility of it being renewed. Is this likely to cause any problems? (e.g. may be viewed as a disguised permanent employment?)

As has been said above, if you live and work in France you will pay French tax, simple. Ask yourself, if you live and work in the UK paying UK tax, why would doing the same thing in France be any different?

[mike 0]

As has been said above, if you live and work in France you will pay French tax, simple. Ask yourself, if you live and work in the UK paying UK tax, why would doing the same thing in France be any different?

The difference is that I'm living in the same country as the company I work for. But I guess your point (which is probably the correct one) is more about where I'm working from physically and less about where my company is registered.

[Fred Bloggs]

The difference is that I'm living in the same country as the company I work for. But I guess your point (which is probably the correct one) is more about where I'm working from physically and less about where my company is registered.

Exactly. It's nothing at all to do with where the client is, it's all about where you are. Because that's where you're taxed. There's no probable about it.

[zerosum]

Study the Brexit Withdrawal Agreement very carefully, because there are strict conditions attaching to your 'right' to work in France as of the EOY.

[mike 0]

Study the Brexit Withdrawal Agreement very carefully, because there are strict conditions attaching to your 'right' to work in France as of the EOY.

I am an EU citizen, I guess this comment was assuming I was exclusively a British national?

[ContractorPL]

Hi All,

Let me share my thoughts & experience here as I have similar concerns (though, in my case, it's about working from Poland via a UK Ltd company but I think there will be similarities as both Poland and France are EU countries).

I think this post as well as other similar posts on this forum do not mention an important factor - UK clients are extremly unwilling to cooperate with overseas limited companies/sole traders. I have a contract with one of the largest UK insurance companies and it is operated by a large UK recruitment/payroll agencies. When I asked if I can carry out my contract via a polish company, they declined. When I asked why, they did not provide any explanation. Ironically, both my client and the payroll agency have offices in Poland, and actually they carry out UK payroll at one of the EU East European countries shared service centre. My friends who contract for other big insurance companies have the same experience. Large UK recruitment agencies, with offices worldwide and compliance departments decline it. In the contract job adverts, when they say 'remote work', they also add 'UK work permit required'. At first I was furious at it, as I thought some narrow-minded wages clerk refuses to step out of his comfort zone or can't handle an IBAN bank account format...but I did some reading and I think the reason they decline is that this is an extra risk for them...they should, for example, check, if there's an IR35-equivalent law in my country etc.

...which leaves people like me with virtually 2 choices. Either run a UK LTD and withdraw money from it (via director's wages and dividends), or to become a sole trader/set up a limited a company in Poland that would bill the UK limited company. I don't have any experience with the HMRC or any fiscal body that can control me, but it seems to me that HMRC would definately want to look into the company that has expenses equal 99% of its revenue. Nature of business in the companies house for such company should say 'moving money across companies', not 'IT development services'.
Do you really think that would be accepted by HMRC? Wouldnt' they say, for example, that since 100% of work is done remotely on the computer servers which are physically in the UK, that is the UK work? Or would the fact that I plan (when covid eases) fly to my client for a few days in a month matter? Or the fact, that corporate tax in Poland is 9%, two times smaller than UK's - won't they think I'm tax evading? Simply put, I'm very much afraid of doing this.

I understand the main point of concern here is that fiscal authorities in my resident country will question the residency of my company. The residence of the UK Limited company is defined by 3 factors (incorporation place, place where records are kept/bookkeeping is done, place from where the company is controlled). First two are easy to meet. As far as control is concerned, this is mostly about the company board meetings. I plan to hold a few board meetings of my company in a year, and they will happen while I'm on the Isles. I probably will have these documents certified, I also plan to collect evidence of each of my UK visit. I might also ask HMRC for the certificate of residence of my company. Do you think they will give it to me?

From what I have googled, it will be more difficult to prove my company is not a UK resident if there aren't any indicators that I have a permanent establishment in Poland. Therefore I must not:
- trade in Poland/for polish clients
- employ people here
- buy any office equipment
- use polish bank accounts (UK Ltd money is in the UK bank, I pay my director's wages/dividend to a UK personal bank account, then transfer money to Poland)

My main question is, if worst come to the worst, and polish tax authorities make a judgment I run a polish company, what can happen? They will calculate the corporate tax (which is much lower here) and add some penalty interest. Can I then ask the HMRC to give me my corporate tax back? I might be better off actually
Both Poland and the UK have signed the MLI tax convention, there's also double taxation agreement.

Looking forward to seeing your comments and opinions.