SETTING UP BUSINESS OFFICIAL IN UK AFTER TRAVELING

[Work Work Work]

Hi,

I left the UK 16 months ago to travel. I informed the HMRC I was leaving and that was that. However last July whilst traveling I started an online business selling products in the US and now it has taken off. I am returning to the UK in June to start selling in the UK and I am going to register the business as an LLC on my return.

My questions is how do I approach the issue of the money I earned before I return to the UK (July 2015 - June 2016). Total £24k Profit. I do not want to pay tax to the HMRC on the income I have earned as I was not living, working or selling in the UK during this period. I have also not stayed in any country above there agreed taxation periods so I have not registered for tax in any other country. Where do I stand legally with this? I believe I have 2 options.. Any help or advise would be much appreciated?

- Option 1 : Register as a Sole Trader for period July 2015 - June 2016 upon my return to the UK (Must inform HMRC within 6 months after first year of business). Then transfer the business to an LLC. Downside is I will have to declare all my earning when not living in UK and pay tax.

- Option 2 : Start the UK LLC when I return to the UK and just forget about what I earned before. I still have clear accounts for this period so if the government ever for any reason starts asking then I can show them the accounts and also tell them I was not living in UK.

[GlobalTaxAdviser]

Hi

I am afraid tax will be due somewhere - you cannot simply forgot about paying tax. There are rules in each country governing residency that will determine your potential tax liability and doesn't necessarily relate to the number of days you have stayed or worked in a country

The starting point would be to look at the Statutory Residency Test to see if you were non resident in the UK then I would also look at perhaps other countries where you have worked and ascertain if you have a tax liability in the US too.

Kind Regards

GTA

[Work Work Work]

Hi GTA,

Thank you for the clear reply. You have confirmed what i believed. But did hope was not true If i set up in the uk as a sole trader i am covered for most of the countries as the Uk either has a double tax agreement with them i.e US. All the other countries i stayed no longer than a long holiday so there should not really be a problem. Also countries like thailand / malaysia are tax free for earnings outside their country.

I will return to the uk, pay tax due for 2015 - 2016 as sole trader but run the business as a partnersip so we can use my wifes tax free earnings threshold. Keep as sole trader partnership until i return in June and then set up as an LLC partnership (can i set up now even though i will not be able to bank account up until in the country?) . I will need to seek financial advise on how best to set up the LLC Partnership (with my wife) as i will have stock in the business paid for but not sold. I will need to transfer this to the LLC. Can you point me in the right direction of a good accountant with experience of online e-commerce (ebay / amazon) for US sales and potentially Europe.

I will also have reached the Uk VAT threshold when i return. Curretly all my sales + purchases are made outside the UK / EU so there is no VAT charged or Paid. Will i still need to set up as VAT registered? It would be beneficial to not have too so i can start my UK arm of the business without charging VAT.

Sorry for all the questions but i want to do this right and run my business professionally. All advice is appreciated.

[GlobalTaxAdviser]

Hi

Your accountant can go through the statutory residence test with you. This is will then determine your tax status in the UK.

I understand you must have lived in the UK and traded in the UK to become a sole trader.

Though, I expect you will need to look at the domestic tax laws where you have lived to see if there is a tax liability in that country and then the double tax treaty.

Kind Regards

GTA

[Work Work Work]

Hi,

Yes I am a UK national. I still have a place of residence in the UK and all my bank accounts are in the UK. I thank you for taking the time to respond to my query. You have answered my questions clearly and I am now going to focus on turning the business into an LLC and become VAT registered.

I do not have an accountant at this moment, do you know any good accountants near Leeds who are specialists in online e-commerce sales (Ebay / Amazon / Website)? I need some support and advice on setting up the LLC + VAT accounts as I need to transfer assets from the partnership.

Thank You