Basic questions

[TheGrave]

Hello guys,

Great forum, I'm so relieved I found it!

I have a couple of questions myself to clear the concepts of contracting in the UK before moving in:

1) As far as I understand most of you have your own companies registered in the UK, is that correct?
2) I see also some guys are going through these so called "umbrella" companies which probably hire them as an intermediate company between them and the end client just for the purpose of issuing invoices, correct?
3) I, myself, have a company registered in another EU country and I'm planning to come to the UK and go after some contracts. The idea was that insurance rates, personal and corporate taxes are much lower here. Besides that, when billing from another EU country the customer does not have to pay VAT (I'm pretty sure they'll like this). Could I have any administrative, legal or other problems getting a contract in my case?
4) It occurred to me several times that people are mentioning that they have contracts signed with the HR agencies instead the customer itself. Is this common practice in the UK? I thought that HR agencies are just getting a commission from their clients for finding the right guy.

Cheers

[NotAllThere]

Hello guys,

Great forum, I'm so relieved I found it!

I have a couple of questions myself to clear the concepts of contracting in the UK before moving in:



Cheers

1) As far as I understand most of you have your own companies registered in the UK, is that correct?

Unless we're going through a brolly, yes.

2) I see also some guys are going through these so called "umbrella" companies which probably hire them as an intermediate company between them and the end client just for the purpose of issuing invoices, correct?

Yes... mainly.

3) I, myself, have a company registered in another EU country and I'm planning to come to the UK and go after some contracts. The idea was that insurance rates, personal and corporate taxes are much lower here. Besides that, when billing from another EU country the customer does not have to pay VAT (I'm pretty sure they'll like this). Could I have any administrative, legal or other problems getting a contract in my case?

Definitely you will have problems.

4) It occurred to me several times that people are mentioning that they have contracts signed with the HR agencies instead the customer itself. Is this common practice in the UK? I thought that HR agencies are just getting a commission from their clients for finding the right guy.

It is common practice. Recruitment consultants only get a one off commission for permie roles.

[SueEllen]

Hello guys,

I'm not a guy.

Great forum, I'm so relieved I found it!

Welcome

I have a couple of questions myself to clear the concepts of contracting in the UK before moving in:

1) As far as I understand most of you have your own companies registered in the UK, is that correct?

Lots of us who are UK based do. Not everyone on here is UK based.

2) I see also some guys are going through these so called "umbrella" companies which probably hire them as an intermediate company between them and the end client just for the purpose of issuing invoices, correct?

Massive thread on the accounting/legal forum about it.

3) I, myself, have a company registered in another EU country and I'm planning to come to the UK and go after some contracts. The idea was that insurance rates, personal and corporate taxes are much lower here. Besides that, when billing from another EU country the customer does not have to pay VAT (I'm pretty sure they'll like this). Could I have any administrative, legal or other problems getting a contract in my case?

Lots of problems:
1. UK tax legislation is very complex so there are reasons why you charge VAT
2. Most agencies won't touch non-UK registered companies as they don't want any hassle with HMRC (taxman)

4) It occurred to me several times that people are mentioning that they have contracts signed with the HR agencies instead the customer itself. Is this common practice in the UK?

Yes

I thought that HR agencies are just getting a commission from their clients for finding the right guy.

Cheers

Have a read of all the guides and use the search if you have any questions as most have been answered. (Though as I stated UK tax legislation is complex so you won't always find a definitive answer.) If you can't find the answers then post here.

Very few UK companies want to deal with multiple businesses hence using a recruitment agent is very common.

[Sockpuppet]

You will have to charge VAT. Its done by the customer, effectively they charge themselves VAT on cross border invoices and the same rules about what is reclaimable stand which doesn't make you any cheaper than a standard uk company.

[SueEllen]

You will have to charge VAT.

Depends.

I know UK contractors who don't charge VAT due to their yearly turnover being under the threshold, or can't due to who the end client is.

Which is why I said the tax rules are complex.

[nomadd]

I'm not a guy.

Yes you are, Brian. And you are 55 years of age and balding.

You really must let this 1980's Soap Opera image of yourself go. Remember what the nice man at the clinic said...

[SueEllen]

Yes you are, Brian. And you are 55 years of age and balding.

You really must let this 1980's Soap Opera image of yourself go. Remember what the nice man at the clinic said...

[TheGrave]

You will have to charge VAT. Its done by the customer, effectively they charge themselves VAT on cross border invoices and the same rules about what is reclaimable stand which doesn't make you any cheaper than a standard uk company.

I'm 100% sure you are wrong, I've checked this with a number of accountants, read some EU directives regarding that and lots of local laws in my country. VAT is not charged between EU countries for importing/exporting services (maybe it was for goods but that doesn't matter to me). I'm not coming to sell flowers you know

Lots of problems:
1. UK tax legislation is very complex so there are reasons why you charge VAT
2. Most agencies won't touch non-UK registered companies as they don't want any hassle with HMRC (taxman)

Come on, that doesn't sound serious to me Tax legislation is complex all over Europe mostly because of VAT (which, in that case, is not applicable as I said). That's why company hire accountants after all Besides that, many of the IT consultants in the UK are not British (forgot to mention I'm in IT) and I'm pretty sure at least half of them does not have UK-registered companies. I already have friends out there applying the scenario I quoted.

[SueEllen]

Come on, that doesn't sound serious to me Tax legislation is complex all over Europe mostly because of VAT (which, in that case, is not applicable as I said).

No tax legislation in the UK is complex and VAT is the simplest part of it to get your head round.

In fact the VAT department of HMRC will even help you calculate your VAT etc because you are collecting the money on behalf of them if you are VAT registered.

That's why company hire accountants after all

Even accountants don't agree on the interpretation of tax laws. For example have a search on here about salaries for directors who are the only employee of their company if you don't believe me.

Besides that, many of the IT consultants in the UK are not British (forgot to mention I'm in IT)

I know. I'm in IT also (yes- there are female contractors who work in IT) and I have friends and worked with those from other countries.

and I'm pretty sure at least half of them does not have UK-registered companies. I already have friends out there applying the scenario I quoted.

Lots do use UK companies because loads of agencies won't deal with foreign ones. Some put it in the contracts others just withdraw the contract if you aren't operating from a UK registered company. This is due to the small risk to them if everything isn't above board. (BTW you still may be required to pay corp tax in the UK even if your company is registered aboard depends on tax agreements.)

Plus they find the tax and NI loopholes are better allowing them to keep up to 80% of company income particularly considering if you stay 183 days in the UK you are tax resident anyway.

I should add setting up a UK company can cost you nothing. I set mine up free via my accountant and so do lots of people. Most accountants now have rules in place that as long as you stay with them for year you don't pay anything, but at the time I set mine up mine didn't.

[TheGrave]

Thanks for the heads-up Sue. I guess I'll see how things work in a month or so when I come. Setting up a company in the UK for the moment is out of the question for me, I'm having more than enough headaches dealing with brainless government employees already

Plus they find the tax and NI loopholes are better allowing them to keep up to 80% of company income particularly considering if you stay 183 days in the UK you are tax resident anyway.

I'm not quite sure how this 183 days rule applies as I'm planning to send myself on a business trip to UK from my company. I have a blue card and everything but I'm not going to register as a resident there as I don't plan to become such. Can you point to some documents that can clarify this rule?