Contracting to a US company

My company is looking into me contracting (consultant) to them for the first two years I am in the UK.  They do not have a UK entity by which to pay me.  What do I need to set up tax wise to do this so I make sure I am protected and legal in both the US and UK?

Hi Dar,
I'll take a stab on this...

There are certain agencies which look after overseas contractors and their various tax situations etc. I'd have thought that you sign up with them and they deduct whatever is required from the contractor pay/tax situation you're in leaving you with your 'take home' dosh.

I think the legislation which covers this is called IR35 - I'm not 100% sure it's what will affect you but I do know it covers 'contractors' who work in UK companies (even if that company is a subsiduary of a US one)

Now, another route would be that you have your 'own' company - maybe form it there in the USA and then you 'transfer' yourself over here. I'm thinking more along the lines of creating a legal way in which to work over here and one which covers Visa's as well. I'm not sure if a non UK citizen can 'setup' a brand new company here or not - I know I as a UK citizen cannot 'seup a new' company in the US.

Just some points to think about and maybe research. I do remember seeing adverts in my weekly 'Computing' magazine (which you can get from WHSmiths here) aimed at international contactors working in the UK on work permits etc - I think it sounds like you'd be one of them- I'll try to see if I can find the name of the agency, hope they advertised in the last 2/3 issues !

As always, speak to a qualified UK/US legal person who knows both systems in order to get the correct advice..

hope this helps a bit!

Cheers, DtM! West London & Slough UK!

Thanks, Dennis!  If you can find that info, it would be great!  However, I will be over on a spousal visa so eligible to work.

There are far more issues here than just tax ones.

From an English law perspective you will probably be regarded as an employee so you will owe UK PAYE taxes.  If there is no UK entity to pay these you will pay these yourself.

The good news is that as an employee you will be covered by English employment law (eg annual leave, contractural notice periods etc).

The downside is that your employer may be creating a permanent entity in the UK so requiring the US employer to account for VAT, transfer pricing issues and UK corporate tax and filings.  Your employer should take advice and you should ask them to pay for the advice you'll need as well.

There are far more issues here than just tax ones.

From an English law perspective you will probably be regarded as an employee so you will owe UK PAYE taxes.  If there is no UK entity to pay these you will pay these yourself.

The good news is that as an employee you will be covered by English employment law (eg annual leave, contractural notice periods etc).

The downside is that your employer may be creating a permanent entity in the UK so requiring the US employer to account for VAT, transfer pricing issues and UK corporate tax and filings.  Your employer should take advice and you should ask them to pay for the advice you'll need as well.

I don't mind doing the PAYE myself (had expected that given what I had heard).  I hadn't thought of the rest.  I wonder if it would still apply considering I will be contracted to handle Regulatory filings for a US company filing in the US and there isn't an issue with pricing issues/corporate tax/etc.  Basically, I will just be doing the same job I do in the states, but, remotely (which is just loads of research and complicated US form filling out duties).