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Where Taxpayers and Advisers Meet

Opening remote company, tax implications

Joined:Sat Mar 06, 2021 10:22 am
Opening remote company, tax implications

Postby forcedout » Sat Mar 06, 2021 10:43 am

With IR35 reforms coming in on the 6th April my company will no longer be able to trade.
Unfortunately all my clients and potential clients have decided that they will deem all contractors inside IR35 (They don't want to risk long and costly battles with HMRC)
I do have international clients which also come under IR35, my question is-
If I open a remote company in the EU for example Ireland or Cyprus but continue living in the UK (around 6 months of the year) I never work in the UK.
I realise I have to pay some tax to the UK, could someone explain how it would work? or if it is even possible to do?
Thanks in advance

Joined:Fri May 16, 2014 3:47 pm

Re: Opening remote company, tax implications

Postby AGoodman » Tue Mar 16, 2021 5:51 pm

You can open another company in another jurisdiction. It, and potentially its employees and shareholders, may be subject to local tax.

If the company is genuinely in another jurisdiction then it won't be subject to UK corporation tax. You couldn't run the company from here and i'm not sure how you would avoid this if you are here 6 months of the year.

There are also issues with the "transfer of assets abroad" anti-avoidance legislation. By default you would be liable to income tax on the company's income and to avoid this (under current rules) the company would need real substance with an office and employees in the local jurisdiction. This is an exception for EU countries imposed by the European Court of Justice in EU times so could be withdrawn in the future following Brexit.

Joined:Thu Dec 03, 2009 5:35 pm

Re: Opening remote company, tax implications

Postby Incredulum » Thu Apr 08, 2021 1:33 pm

If the company is genuinely in another jurisdiction then it won't be subject to UK corporation tax.
My suspicion is that the company will be managed and controlled from the UK, so UK tax resident and therefore subject to UK corporation tax. But that's not the whole question.

The question is, will this get you round the IR35 problems. My gut reaction is that if the companies you are working for say 'everything is IR35, like it or not' they will not be prepared to use an overseas company either. They'd have to take expensive tax advice to ascertain the answer, so they're not going to do that for you.

With the increase in corporation tax to 26% next year, the benefits of operating through a limited company rather than employed will be lower anyway. So I don't understand why you 'won't be able to trade'? Yes, you'll have to pay more income tax/NI like most people have to.

Joined:Wed Aug 02, 2017 9:09 pm

Re: Opening remote company, tax implications

Postby darthblingbling » Thu Apr 08, 2021 1:58 pm

For your UK clients, for IR35 you essentially disregard the intermediary and focus on the employment status of the individual if engaged direct. If the individual is UK resident and the engagement is one of employment then the fee payer would be obliged to operate PAYE as the individual is UK resident. The residency of the intermediary is disregarded. To be outside IR35 in this scenario, assuming the engagement is deemed to be one of employment, you would need to be personally non UK tax resident and perform no duties in the UK.

This is also ignoring issues in other countries that you and your end users may face as each country has their own rules on engaging through an intermediary.

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