Resident and working in UK, employed by French company

by **alaric66** on Mon Jul 04, 2011 10:56 am

Hi all. I've recently taken up employment with a French company, and am now working from home in the UK. I've been onto the tax office this morning and cannot get to the right people to talk to; after the 5th number I gave up. Can anyone please advise? My understanding was that under a UK France dual taxation treaty I would be paying tax as though I was employed by a UK company, and would just need to deduct anything I'd had to pay in France. The company has no UK office or agent, and this appears to be complicating matters.

Thanks in advance.

Sean.

by **etf** on Tue Jul 05, 2011 4:08 pm

Hi Sean,

In the past, for the deduction of income tax and national insurance from earnings to take place through the PAYE system, there had to be an employer in the UK on whom the UK tax authorities could impose the PAYE regulations. Where an employee worked in the UK for an overseas employer that had neither a presence in the UK for tax purposes, nor a UK place of business, the employee was responsible for:

i) advising the UK tax authorities of his/her presence; and

ii) paying tax and primary class 1 NICs on his/her earnings.

However, from 1 May 2010, an employer in another European Union (EU) Member State i.e. France, with employees in the UK's National Insurance system is treated as having a place of business and registered in the UK for National Insurance purposes and has to pay secondary National Insurance and deduct contributions from the employees. Your French employer should therefore review its obligation here.

It may also be worth double checking that the duties you perform here in the UK, will not create a taxable presence for your French employer in this country with the company tax filing obligations this would attract.

Kind Regards

etf

http://theexpatriatetaxfactory.com

by **alaric66** on Tue Jul 05, 2011 8:32 pm

Thanks for the reply etf. My plan now is to find a local accountant that can help me work out how to set this up. My employer advises me that they have a uk accountant looking at this so may be able to advise before long. I thought that under the double taxation treaty, I would pay tax as though I was employed by a uk company, and anything deducted abroad would be deducted from my uk tax liability. I thought this would be simple...

Thanks again.

Sean.

by **Aegg** on Wed Jul 20, 2011 12:07 pm

Sean

We have offices in the UK and France and are fluent in both languages. We can help get your FR employer regsitered in the UK and process their payroll there so let me know if you need any help

andy.e(at)ewp.uk.com

Cheers

by **alaric66** on Thu Dec 08, 2011 12:23 pm

Hi all. It's some time since my last post on my tax. I need to get resolution to a problem quite urgently.

My French employer has recently engaged a UK accountant to deal with paying my tax. They did this 5 months after I started working for them. He has advised them that they are responsible for paying employer and employee NI contributions at source, which agrees with what I was advised independently by a local accountant. However, he has also advised them that they need to pay the income tax at source also, in other words that they need to pay by PAYE. This does not agree with the advice that I obtained. I visited a UK accountant some time ago for advice as I was concerned my employer was taking too long to work out what to do. My accountant advised me that the income would be treated as foreign income, so I would only need to submit a tax return at the end of the financial year. He also advised that they would need to pay both parts of the NI contributions.

I am now being asked to pay £8500 back to my employer as they are going to pay the tax at source.

I'm not trying to be difficult with them or to avoid tax, but my understaning is that they have no legal requirement to pay the income tax at source. Thus it's their choice. I need to establish the legal requirement; they are based in France with no UK base at all, they employ me and I work 100% in the UK.

Help.

Thanks in advance.

Sean.

by **etf** on Fri Dec 09, 2011 2:40 pm

Hi Sean,

If I were in your shoes, I think I would actively be encouraging my employer to deduct tax under PAYE.

The potential alternative of you:

-submitting an annual self assessment tax return with the potential interest and penalties that can be levied for misdemeanours, and
-undertaking monthly calculations so you know what tax to squirrel away for the relevant tax payment dates,

does not look like an attractive proposition to me.

Surely it is better for your employer to undertake the donkey work throughout each tax year, or am I missing something?

Kind regards

etf

http://theexpatriatetaxfactory.com

by **alaric66** on Sat Dec 10, 2011 2:28 am

Hi. It appears that once registered for PAYE there's no going back. If not on PAYE you submit a tax return at the end of the year and then the tax is due some time later. The benefit for me is being able to pay into my pension with gross salary rather than net - using net I've already paid 40% tax on it, and while I can claim it back cash flow is the issue. Secondly I could offset the balance of my account against my mortgage thereby reducing the term etc. Thirdly I need to submit a tax return anyway as I work from home now, but will also now need to claim back childcare allowance.

Still, I have no choice now.

Sean.