UK Ltd company / Now based in NZ / Working for same global company

**ASB** · 7 December 2010, 16:01

Originally posted by scra039 View Post

Hi,

I have been working for a company in the UK (Global company with offices in UK). During my time in the UK I set up a UK Ltd company to contract through. I have since moved to NZ where I am living and continue to work for the same company. My contract is being extended and the company is now purposing a new payment structure where I would get paid my daily rate in NZD into a UK foreign currency account held by my UK Ltd company as they want to continue the contract through my UK Ltd company.

I would like to know if this is both legal? and how it would work TAX-wise. All money earned by the company is still in the UK but the UK Ltd companies employee is working from NZ. I would obviously like to pay myself a salary, so would this mean I then have TAX obligations in NZ as well as UK (UK corporate and NZ personal)?

Would really appreciate some guidance on this. I can see it turning into an accounting nightmare for my Ltd company.

Thanks in advance
-Steven

There are a number of issues.

1. Does the company remain UK resident? From your description it would appear not, in this case the UK profits should not be subject to UK taxation. You need to address the issue of residency with HMRC, they should be able to offer guidance and possibly an opinion, however they do not generally offer pre transaction opinions.

HMRC Search

2. Is the company resident in NZ? Don't know, this depends upon the NZ tax rules, however I would imagine that they would probably regard it as resident and tax it as such.

New Zealand tax residency for companies and individuals (For non-residents & visitors)

3. Is the company resident in both the UK and NZ? Entirely possible. In this case they will both seek to tax, however the effects of this are generally mitigated to the highest rates (or sometimes less) by the relevant DTA's.

**BlasterBates** · 7 December 2010, 16:54

Very generally you're taxed where you do the work. It may be illegal in New Zealand to be working for a UK Ltd, while your resident there.

You need to set up a NZ company and work as a New Zealand resident.

If the New Zealand tax authorities decide you should be taxing your business there, they won't care what UK tax you've paid, they'll just send you a massive tax bill with penalties, and you won't get a penny back from the UK tax authorities.

It always tempting when going overseas, just to continue through your Ltd and assume because it is a UK company it is "immune" from local taxation. It isn't, not when there's an employee and in particular a director living and working there. There are generally woolly complicated rules if you are there for a short term which may allow you to escape local taxation for a while, but when you are deemed resident, they'll want to tax everything that you made since you set foot in New Zealand. So if you are planning to stay, get it above board.

**xchaotic** · 7 December 2010, 16:59

You might try to keep it low profile.
I would advise that they keep paying you in pounds and you do the conversion yourself, possibly after you've paid yourself salary or divs.
If you're being paid in NZD you'll have a hard time proving your company is centered in UK.

Alternatively set up two companies one UK one NZ, both yours and transfer the funds as needed.

**scra039** · 7 December 2010, 21:35

Thanks everyone for responding. You have confirmed my thoughts that this is going to be a complicated setup. I have emailed a NZ accountant to see what they advise.

When I sort out the final arrangement I will update the thread.

Thanks again.
-Steven

**Gonzo** · 8 December 2010, 06:39

OK. This is something that I looked into in detail.

1. As the others have said, it is the residency of your company that is critical. If you are the sole director and shareholder then your company will become resident in New Zealand at the same time that you do. It might be possible to argue that you are not resident in New Zealand if your stay is for less than 183 days and you do not acquire anywhere to live during that time, but that is clutching at straws really.

You might think that appointing UK based Directors to run your company for you in your absence could get around this but see point 2 below.

2. You also need to be aware that there is a general anti-avoidance rule in NZ. If the local tax man decides that a structure or transaction has been used for the sole purpose of avoiding tax then they can just ignore it and send you the bill that you should have paid.*

EDIT: * I see that you have a general anti-avoidance rule in the UK now.

**mavster07** · 8 December 2010, 10:26

What I've seen done in the past between a UK company and an Oz company is this.

You work for the Oz company.
The Oz company contracts your services to the UK company.
The UK company contracts the services to the client.
The Oz company pays the tax (as thats where the income was 'earned').

Suggest you speak to your accountant about this sort of setup. Its complicated and may not be worth the hassle as double tax agreement issues do come into play, and they can be more complicated when companies are involved.

UK Ltd company / Now based in NZ / Working for same global company