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Topic: UK taxes - US consultant  (Read 1288 times)

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UK taxes - US consultant
« on: February 15, 2007, 10:08:52 AM »
I've been here 5 months and have an opportunity to consult for a the company in the US (husband has the work visa).
I would be working at home (laptop & software) for a US company on US project data and the income would be paid to a US bank that I use for my S-Corp with Paychex doing my payroll (I haven't suspended the S-Corp in the event that I wanted to work.)
Does anyone know if I would be required to pay UK taxes on my income?
My husband's company arranges for an accounting firm to do our taxes while we live here. I have asked PW (husband's accounting company) and their answer is that I would need to pay both US and UK taxes, in which case most of my income would go to the government.
Thanks in advance for any experience/opinions.


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    • British American Tax
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Re: UK taxes - US consultant
« Reply #1 on: February 15, 2007, 10:22:17 AM »
Your S-corp is likely to become a UK corp for UK tax purposes.  You are setting yourself up for a big, big, fall.  Get professional advise IMMEDIATLY from someone who understands Expatriate Taxation, Tax Equalization, UK corporate tax, US corporate tax, UK personal tax, and US personal tax.  I'll give you a hint:  PWC is working for your boss, not for you.  They're advice may not be impartial, and the team working expatriate taxation may not have anyone familiar with the UK taxation of US corporations. 

Do NOT rely on an e-forum.  Do NOT rely on your boss's free tax help.  Pay for and take real advise from real-world accountants who deal with your situation on a daily basis.
Liz Z i t z o w, EA
British American Tax


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Re: UK taxes - US consultant
« Reply #2 on: February 15, 2007, 02:21:38 PM »
I can strongly agree with Liz.

Your S-Corp is managed & controlled in the UK and consequently is treated for UK tax purposes as a company that is UK resident and needs to file UK corporate tax returns.

Any money drawn from it will be subject to UK PAYE (for which the S-Corp will need to register).

The income will continue to be a flow-through for US purposes (and so subject to US tax on your 1040) but foreign sourced on your K-1s so you can claim the foreign earned income exclusion). However it is not a flow through in the UK so earnings will be taxable at the S-Corp level and disatributions subject to UK PAYE.

You need professional advice.


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Re: UK taxes - US consultant
« Reply #3 on: February 15, 2007, 03:27:41 PM »
PWC is the company that prepares & files US taxes for us while we are on our expat assignment; thanks for the heads up on where their priorities lie.

Thank you for all the advice. I liked being a consultant, flexible hours and new projects, but it looks like if I want to work I need to work as an individual for a company and suspend the S-Corp until I move back to the States. Fortunately there are postions in my field and I have 30 yrs experience with a CV that should get me hired.

As an aside. I tried to volunteer at Bushy Park; the application requires 2 "referees" (I assume only UK residents count) who have known me for 2 years. Since I've only been here 5 months it's pointless to pursue. However, I would have counted birds, picked up trash, whatever to help; really love the park. Checks & balances, they work.


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