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UK contracting - taxes and border questions

Is it a nightmare for an American to take a small contract for a UK firm?

8:13 pm on Feb 1, 2005 (gmt 0)

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I'm starting a two month contract for a company based in London. Does anyone have any experience getting paid from a UK company specifically in regards to dealing with their taxes and US tax credits? My accountant doesn't seem to want to touch it. Am I going to have to pay some expensive company to file all the paperwork for me?

Also I am going to London on Saturday for two weeks for meetings and will be telling the border agents the same. Is that ok or is a Visa required for that small amount of time? I have to return once more in March for another couple of weeks. Can the British company even pay me if I don't have the work Visa?

Any advice is greatly appreciated.

8:21 pm on Feb 1, 2005 (gmt 0)

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Can the British company even pay me if I don't have the work Visa?

Technically speaking they can't hire you unless they are satisfied you have right to work in this country by virtue of being local or EU citizen, or having relevant permission (work permit, permanent residency etc).

It sounds like you are getting business visa which should allow you to negotiate contract, perhaps see some people, but I don't think it allows to do any paid for work here in the UK.

Talking of payments, again technically speaking you can sign a contract between yourself or your firm and your client and then invoice them. In this case they will pay you invoiced amount and all tax issues will be yours to handle. Unless you will be in the UK for longer than 183 days a year you should not be paying taxes here, however as far as I am away you will have to pay US taxes on money earned here.

11:28 am on Feb 2, 2005 (gmt 0)

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Try searching the Inland Revenue website for 'non-resident' or 'double taxation'.

The situation as far as I understand it is that you won't normally be taxed BOTH in the US AND in the UK, because that would be unfair.

From the IR website:

If you have income from a source in one country and are resident in another, you may be liable to pay tax in both countries under their tax laws. To avoid 'double taxation' in this situation, the United Kingdom has negotiated double taxation ('DT') treaties with more than 100 other countries.

Give them a ring or send them an email, they're quite helpful.

As far as I know it's not a particularly big deal - I've got American friends who've worked over here in the UK without big tax problems - I think you just do some paperwork and then declare your income to the US tax authorities.

Re the visa issue - suggest you try the 'UKvisas' website, or the Home Office (who are in charge of immigration and suchlike).

Best wishes, a.