Using offshore Indian company

[sarabha]

I am a freelancer and have a limited company in UK. And, I also own a company back in India. And, I have few software developers working from Indian company for me.

Couple of my clients paid directly to the Indian company. Obviously, the respective taxes are paid in India. To clarify, sale happened here. Development happened in India, but me being in Uk managed the developers there. Can you suggest if such an arrangement is illegal.

If it is is illegal, can you suggest, how would I 'correct' such a thing. Do I let HMRC about this voluntarily. If it is illegal, Is this a criminal offence or a civil offence.

And, I was worried - I could be doing something wrong with this and since started invoicing from UK even for those clients. And, I am paying to the indian company directly from my UK company. The problem is, how much I pay is pretty much decided by me. And, am not sure what is the effective way to make these decision.

Can someone knowledgeable in this area suggest what is the best way of operating both of these companies from UK tax point of view.
Read more at http://www.taxationweb.co.uk/forum/uk-i ... IQruubh.99

[section 44]

You'll need to provide some more information, for example:

Were these client's of: yours, your UK company's and/or your Indian company's?

Are you: an employee, officer and/or agent of your Indian company?

Are there transactions between your Indian and UK companies? If so then provide details.

[wamstax]

You would also need to consider whether because you are resident in the UK and controlling the Indian company from the UK then it may also be liable to UK Corporation tax in any case as a UK resident company

[wamstax]

Just read your other posting and I think that you should obtain the benefit of a specialist in this area who would be able to consider both the UK and Indian set up and also the tax implications for yourself given that there may in fact be some doubt as to who controls the Indian company.