American-based IT Contract - clarifications? American-based IT Contract - clarifications?
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  1. #1

    Nervous Newbie


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    Default American-based IT Contract - clarifications?

    Hi everyone,

    First-time contractor here with a couple of questions that I wanted to clarify. I'm currently working with a company, but my visa with them is expiring and I am moving back to the United States in a few weeks. I've worked out an agreement with them to continue contracting for the company, but based out of the US rather than the UK. A couple of questions I wanted to clarify:

    1. Do I still need to register as a sole trader with HMRC if I am acting as an American contractor rather than a UK-based one? I've done some self-verification that I wouldn't be classed as a British resident by the end of this tax year, so I'm a bit unclear about whether I need to do any registration from the UK end of things.
    2. Somewhat related to the first question - the proposed contract states that it would be governed by the laws of England, but given that I'll be primarily operating from the US as an American agent, would agreeing to the contract require me to follow the necessary registration and tax guidelines for a UK contractor rather than a US one?
    3. The company is requesting a payout to an English-based bank account. Now I currently do have one, but for tax purposes it seems that it's more sensible to insist that they wire payments to my invoices to my American accounts to avoid any ambiguity about my residency status.

  2. #2

    Should post faster


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    Quote Originally Posted by uscontractor View Post
    Hi everyone,

    First-time contractor here with a couple of questions that I wanted to clarify. I'm currently working with a company, but my visa with them is expiring and I am moving back to the United States in a few weeks. I've worked out an agreement with them to continue contracting for the company, but based out of the US rather than the UK. A couple of questions I wanted to clarify:

    1. Do I still need to register as a sole trader with HMRC if I am acting as an American contractor rather than a UK-based one? I've done some self-verification that I wouldn't be classed as a British resident by the end of this tax year, so I'm a bit unclear about whether I need to do any registration from the UK end of things.
    2. Somewhat related to the first question - the proposed contract states that it would be governed by the laws of England, but given that I'll be primarily operating from the US as an American agent, would agreeing to the contract require me to follow the necessary registration and tax guidelines for a UK contractor rather than a US one?
    3. The company is requesting a payout to an English-based bank account. Now I currently do have one, but for tax purposes it seems that it's more sensible to insist that they wire payments to my invoices to my American accounts to avoid any ambiguity about my residency status.
    1 - I think the depends on a couple of things. Is the contract between the client and yourself, not the client and a corporate entity (Ltd Co / US equivalent)? If you are going to be based int he US full time, I think you need to speak to an accountant or tax attorney ver there to clarify your position as to your tax situation. If you are registered as a sole trader over here, you will need to contact HMRC when you leave and just sort out what you have earned and the tax etc due on that. If Ltd, speak to your accountant and get them to sort it out for you, will be much easier.
    2 - I believe this is because it is a UK based client that you are working with, so they will want everything to be governed by English law. It shouldn't have anything to do with your tax position etc though, and be more to do with copyright / IP laws etc. If they sue you, they don't want to sue you in America
    3. I would look into this, you might have a couple of options. If you have a UK based bank now, do they have branches in the US too (HSBC for instance?). If so you could have 2 accounts with the bank, a GBP account and a USD account - like this? Also, it might be worth looking at whether you would get a better exchange rate if you got paid in pounds over here and then transferred yourself to the US, rather than relied on the bank exchange rate, especially if this is a long term contract, difference could be worth $'000's

  3. #3

    Contractor Among Contractors


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    Quote Originally Posted by uscontractor View Post
    1. Do I still need to register as a sole trader with HMRC if I am acting as an American contractor rather than a UK-based one? I've done some self-verification that I wouldn't be classed as a British resident by the end of this tax year, so I'm a bit unclear about whether I need to do any registration from the UK end of things.
    You could ask them but I would think not. You'll be US tax resident, not UK. Nothing to do with them.
    Quote Originally Posted by uscontractor View Post
    2. Somewhat related to the first question - the proposed contract states that it would be governed by the laws of England, but given that I'll be primarily operating from the US as an American agent, would agreeing to the contract require me to follow the necessary registration and tax guidelines for a UK contractor rather than a US one?
    No. That's nothing to do with tax, that's just to do with which courts have jurisdiction and with laws hold if there is a dispute.
    Quote Originally Posted by uscontractor View Post
    3. The company is requesting a payout to an English-based bank account. Now I currently do have one, but for tax purposes it seems that it's more sensible to insist that they wire payments to my invoices to my American accounts to avoid any ambiguity about my residency status.
    That is surely unnecessary. I'd open a Borderless Banking account with Transferwise, have them pay into the UK account, and then convert the funds and send them to your own US account.

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