Relocating back to the UK, starting up as sole trader

[Lemondrop]

I've been living and working in Europe for several years, the last two as a contractor. My 'sole trader' business is currently registered in an EU country. I'm relocating back to the UK (I am British), will close my business in Europe and will register as a sole trader in UK. I work remotely from home in a specialised industry. So far so good!

Can someone help me with the following that I am having trouble finding info on:

- Most of my current clients are located outside of the EU. I have been used to noting the following on my invoices in terms of VAT:
- Within EU: VAT shifted (i.e. client deals with VAT themselves)
- Outside of EU: VAT 0%

Is this the same for invoices issued from within the UK on services rendered outside of the UK?

- As I can work from anywhere, I travel extensively and frequently and will spend large chunks of time outside of the UK, staying with friends and family located around the world. I do not want to register as a non resident tax payer in the UK. I will pay all taxes and NI as if I was in the country permanently. Is this going to cause any issue with income/VAT declarations? Can everything be done online?

- My costs are very low: all I need is an internet connection and small office equipment but most of clients require a VAT number so I will register for one. Can I claim stuff purchased overseas (travel expenses, paper, occasional desk space rental etc) on my UK VAT return?

Thanks all for any advice. I contacted an accountant (a friend of a friend) who freaked out and said I would need to contact an international tax expert...which was all I needed to see that she was probably not the person I was looking for to help with my business.

[northernladuk]

How do you find your work? UK agents won't touch a sole trader.

[TheCyclingProgrammer]

Regarding your VAT question, from your POV supplies to businesses in the EU or outside the EU are treated the same: both are outside the scope of UK VAT (the general rule; there are some exceptions). You don't include VAT on your invoice and you don't include them in your VAT return.

The only difference is that your EU clients might have to deal with the VAT under the reverse charge mechanism. You might also have to complete an EC sales list.

If your overheads are minimal, then you're best registering for the VAT flat rate scheme. You'll only be able to recover VAT on capital purchases over £2k bit you'll have simplified reporting requirements and will probably turn a small profit from the flat rate surplus.

[eek]

Regarding your VAT question, from your POV supplies to businesses in the EU or outside the EU are treated the same: both are outside the scope of UK VAT (the general rule; there are some exceptions). You don't include VAT on your invoice and you don't include them in your VAT return.

The only difference is that your EU clients might have to deal with the VAT under the reverse charge mechanism. You might also have to complete an EC sales list.

If your overheads are minimal, then you're best registering for the VAT flat rate scheme. You'll only be able to recover VAT on capital purchases over £2k bit you'll have simplified reporting requirements and will probably turn a small profit from the flat rate surplus.

You don't want to register for flat rate VAT if you have a lot of exports. Its based on all turnover not just UK based on turnover...

[jamesbrown]

You don't want to register for flat rate VAT if you have a lot of exports. Its based on all turnover not just UK based on turnover...

Supplies that are outside of the scope of VAT are exactly that, they are not within the scope of turnover for the FRS.

[jamesbrown]

How do you find your work? UK agents won't touch a sole trader.

Definitely an issue if the OP relies on agents, but working "from home in a specialised industry", suggests that they may not rely on agents, rather contacts and reputation...

[eek]

Supplies that are outside of the scope of VAT are exactly that, they are not within the scope of turnover for the FRS.

Check that with your accountant and your next vat inspector.

Exports outside the eu are included in frs turnover unless it's services being provided. Then you just have the argument as to what is a service where they questioned if a website with a monthly subscription was a service.

I just gave up and shunted the business to another company to ensure I didn't need to worry about it. And if uk sales hit the threshold I will just use standard tax accounting

[scooterscot]

Coming from the EU to the UK for business has 'go away' written all over it. So many obstacles.

[ASB]

Check that with your accountant and your next vat inspector.

Exports outside the eu are included in frs turnover unless it's services being provided. Then you just have the argument as to what is a service where they questioned if a website with a monthly subscription was a service.

I just gave up and shunted the business to another company to ensure I didn't need to worry about it. And if uk sales hit the threshold I will just use standard tax accounting

Eek, that is sort of wrong. But it is the pragmatic view.

Assuming a typical contracting role the supplies are outside the scope. Not zero rated. This does indeed take the out of the frs scheme. Hmrc guidance is quite clear on this.

I entered into a lot of correspondence in order to try and get this confirmed. I failed.

I took the view to keep away from frs. It seemed likely that I might have to end up arguing my case in a tribunal. Current guidance is clearer, so it may be easier.

[Lemondrop]

Nothernladuk: I am an independent contractor: I work for myself not through any agents.

Eek: I provide *services* to overseas clients not goods.

Scooterscot: hmmmnnn, I currently pay 42% income tax on all income I earn over about 500 quid (per year!), plus the highly complex tax system is in a language I only understand 75% of so I doubt there can be more obstacles than I already face.

Next question: am I going to face issues with not having paid any UK tax for the last ±15 years? I have of course been paying tax the EU country I was resident in for all those years.