contracting abroad for UK agency

**prozak** · 28 November 2011, 15:14

Originally posted by chalced View Post

Hi,

I was just wondering if anyone knew what the tax implications were for this scenario... I am a UK Ltd. company, working for a UK agency, but working full time in Africa. I have a UK residence, but am only there for about 10 weeks of the year.
I get paid a mixture of set monthly wages (plus overtime), hardship allowance and cost of living allowance. Accommodation is provided and all I pay for are meals and drinks.
Does anyone know exactly what I would be paying tax wise? Bearing in mind I only pay myself minimum wage and take the rest as directors divedends.
This is the first time my accountant has come across this particular set of circumstances and although he is looking into it, I would like to have half an idea myself (especially as I only see him a couple of times a year!!).

Cheers.

My advice is to get a new accountant if he can't give you a definite answer.

Wait a few minutes and see how quick the accountants who post here can help you.

It all depends on your residency and the variables of how much of the above is revenue through your company. Then double tax treaties come into play as well I guess. Your question reads as though you might be salaried in Africa as well.

I think there will be more questions than answers initially.

**Clare@InTouch** · 28 November 2011, 15:19

Is there a reason you don't have an African company? Presumably you're tax resident there? Have you ever been resident or domiciled here?

Your UK limited company will pay UK Corporation Tax, but potentially you'll be facing African CT too as the effective management and control of the company takes place there. This is where the double taxation treaties that Prozak mentions come into play. SA has such a treaty - is this where you're based?

My first suggestion would be to seek out an African accountant to get advice on the situation there, then you can get advice from a UK accountant as to how that fits in here and decide on your best course of action. Unless you get a UK worldwide tax specialist, who would be quite expensive, it's hard to find someone who could advise fully on both countries.

**chalced** · 28 November 2011, 16:33

I am actually working for the UK government here, so it is not for an African based company... just to throw another stone in.. so I am not liable for tax in Africa.

**Clare@InTouch** · 28 November 2011, 16:46

Originally posted by chalced View Post

I am actually working for the UK government here, so it is not for an African based company... just to throw another stone in.. so I am not liable for tax in Africa.

If you're resident in Africa though (which I assume you are if you're only in the UK for 10 weeks) you might meet their own rules for tax residency. For example in many countries if you're there more than 183 days then they expect you to complete a tax return and pay tax on your worldwide income. You then get credit under double taxation treaties for tax deducted in other countries.

**TheFaQQer** · 28 November 2011, 16:48

Originally posted by chalced View Post

Hi,

I was just wondering if anyone knew what the tax implications were for this scenario... I am a UK Ltd. company, working for a UK agency, but working full time in Africa. I have a UK residence, but am only there for about 10 weeks of the year.
I get paid a mixture of set monthly wages (plus overtime), hardship allowance and cost of living allowance. Accommodation is provided and all I pay for are meals and drinks.
Does anyone know exactly what I would be paying tax wise? Bearing in mind I only pay myself minimum wage and take the rest as directors divedends.
This is the first time my accountant has come across this particular set of circumstances and although he is looking into it, I would like to have half an idea myself (especially as I only see him a couple of times a year!!).

Cheers.

<Pedant>
There's no such thing as "directors dividends". Dividends are paid to shareholders, not to directors.
</Pedant>

**prozak** · 28 November 2011, 16:56

Originally posted by chalced View Post

I am actually working for the UK government here, so it is not for an African based company... just to throw another stone in.. so I am not liable for tax in Africa.

Are you maintaining a life here in the UK? An address etc? Are you expecting to return?

HM Revenue & Customs: Residence and domicile issues

Did you fill out a P85 ?

Your situation could be rather complex. So you need to make sure you determine your residency.

I don't think the end company matters that much.

If you are resident in the UK still then your tax wont be much different to the rest of us resident contractors, but make sure you claim all the expenses for living abroad. The African country might have something to say about this though. Being resident is probably the easiest scenario.

The way you describe your role as getting paid "set monthly wages" has me more concerned about your Ir35 status than your residency.

**chalced** · 28 November 2011, 17:58

The contract is finishing next year, so I will be returning to the UK then. I have retained my UK address as this contract was only going to be for 12-18 months.
The work I do is outside of the IR35 remit, so no problem there

Not sure about the P85 form tho??!!
Wasn't sure that the tax was still the same as the actual 'work' is being done outside the EU.

**Wanderer** · 28 November 2011, 19:35

Originally posted by chalced View Post

Wasn't sure that the tax was still the same as the actual 'work' is being done outside the EU.

Sounds like you should get specialist advice about this one, there could be thousands of pounds in tax at stake here...

**northernladuk** · 28 November 2011, 19:40

Originally posted by TheFaQQer View Post

<Pedant>
There's no such thing as "directors dividends". Dividends are paid to shareholders, not to directors.
</Pedant>

contracting abroad for UK agency