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info@commonwealthcontractors.comAs a Contractor you need to pay Income Tax on (1) PAYE earnings received via an Umbrella Company, OR (2) on Salary and Dividends received via your own Contractor Limited Company.
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Split Payroll Some organisations have been known to structure Income payments between ‘Onshore’ and ‘Offshore’ by running a spit payroll.
Billing contract income earned in the UK to an offshore service provider for the purpose of not paying tax is tax evasion regardless of whether or not the person to whom the money belongs is resident in the UK.
If you come to the United Kingdom as a Non-UK Domicile on a temporary work visa using an offshore structure to deal with income arising ‘Outside the UK’ then using an offshore vehicle may be a perfectly legitimate thing to do.
Over the last few years the HM Revenue and Customs have really clamped down on Contractors who choose to structure their income via ‘offshore’ solution providers with the introduction of BN66.
Strictly, you are UK tax resident for the whole of a tax year when you are UK resident for any part of it. But, if you leave or come to the UK partway through a tax year, HMRC operates a concession under which the year may be split (Extra-Statutory Concession A11).
While day-counting alone may not disprove UK tax residence, it is certainly important for anyone who wants to be considered non-resident for tax purposes.
While you will always be classed as UK resident if you are in the country for 183 days or more during a tax year, avoiding the 183 day threshold, and even avoiding the 90 days / year averaged over 4 years threshold, is not enough to prove non-residence.
If you are a foreign national and you are coming to the UK to work on Contracts it is important to understand how the UK Taxation System will affect you if you.
If you are a UK National (and are UK Domiciled) it is important to understand how the UK Taxation System will affect you if you are considering leaving the UK / working abroad.