I've got a short term contract on a decent day rate. Should I and could I start a UK company?

Employed & Self Employed Auto/Micro-Entrepreneurs
1

Hi all


I'm an AE offering business advice and consultancy (according to my category) - in practice this involves working mainly as an interpreter for businesses (both side of the channel), and also some translation work.


I'm happy that AE is the right business structure in France, given that my regular revenue is currently low (I've been going less than a year, and I have small children so can't work a full-time week for another few months yet).


But I've now picked up a very short term contract on a good day-rate. For this contract, several weeks' worth of well-paid work, clearly staying AE is certainly possible, since I'd still be NOWHERE NEAR the upper revenue limit ;) .


However, should things continue to go well and I continue to pick up "day rate contractor" work, could I and should I set up a UK company? I want everything above board, but I hesitate to say it's relevant for me to pay hefty French cotisations, permanently, on work that has nothing to do with France (isn't being conducted in France, and isn't for a French customer). I'm more than happy to keep up as an AE for my cross-channel interpretation business, and to trade up to a proper company as things get better. My husband, French, already has an accountant, so I'll seek his advice about how and when to do this.


My question relates to UK and overseas work. My husband doesn't think Hollande has a right to shaft me for things that don't concern him!!!


I'm also aware that there is such a thing as "portage salarial" companies in France (and umbrella companies in the UK) - which a contractor can work through (for a limited time, in the case of the UK), and the umbrella company administer's employer's and employee's National Insurance, and takes a cut. I'm not eligible to work for a UK umbrella company because I don't work in the UK. I haven't yet looked into the French portage salarial yet - but my instinct says it'd be yet another great French rip-off. After all, in France we all have to do our own tax admin, so why pay through the nose and still do all the paperwork myself?!


Any ideas, especially on the feasibility of setting up a UK company, would be welcome.


Emily

2

Emily, it sounds like an umbrella company would meet your requirements. It's just a matter of finding the right one in the right country. I worked in Sweden for 18 months via a Swiss umbrella company. Before anyone says anything, as soon as Switzerland was mentioned, I thought of tax evasion but it turned out to be completely legit. They took 9% commission, paid me a salary, which was comparable to Swedish salaries, on which I paid Swedish income tax (30-50%). They arranged for an international tax consultancy, PWC as I remember, to do my Swedish tax return. However, I paid Swiss employers and employee social security contributions (11% of salary in total up to a limit). The company explained that Switzerland has reciprocal agreements about social security contributions and benefits with all EU countries and many others, so you can pay in Switzerland and claim benefits in France, for example. My earnings were pretty high, so earnings - (salary+their commission+Swiss social security), came to quite a significant amount, which they credited to me as holiday. This mounted up to the point where I had a large number of hrs due. They agreed to pay me this as an interest free loan but you could put it into a pension, for example. The staff of this company were mainly Brits, based in Switzerland. As far as I they are still operating.

Also, a significant number of French residents work in Switzerland. Normally they live close to the border. They are known as Frontaliers. My knowledge of how they operate is probably out of date but some deductions are made from salary in Switzerland but they pay tax in France. It used to be the case, that it was up to the frontalier to declare their income to les impots. The Swiss didn't send any info about this to the French government and of course Swiss Bank secrecy is legendary.

Another point is that under the EU savings directive, every EU country is obliged to inform governments of non-residents about interest credited to bank accounts and investments in that country. What counts is the address, which the bank has registered for the account holder. Some countries do this even for non-EU residents and it's completely bone headed, because no mention is made of interest paid by the account holder.

3

Hi Emily

I have been looking at the portage system for a while and am tempted - would be good to share info!

I know it works just like a salaried position except that you pay them a commission based on earnings as they deal with the payroll. Like all salaried employees the end of year tax return needs to be filled out but all cotisations are deducted by the portage organisation hence very little paperwork

I need to check up on other benefits such as right to chomage if you stop, sick leave and so forth.......I had an op two years ago and did not get one penny from the RSI in sick leave and when I closed my former business had to live on RSA which was a lot less than the chomage rate I would have got if I had been an employee

BTW I work in a similar business to you and am awaiting my SIRET etc. I have just been informed that my cotisations will not be organised by RAM/RSI but another organisation that deals with translators, consultants etc.

Who do you pay your cotisations to? I would be most happy NOT to deal with RAM/RSI as they are ******* useless

4

Mine was worth £16,000 a year now! Well, end of this year anyway. Pension fund went bust, lots of people like me dumped. That's why there is a need for really safe ones, which we all thought we had of course. Difficult one because I doubt it would have worked out any different had I tried something other than a pension fund!

5

ah don't worry Brian, I have no illusions about the pension. I was unusual as I paid a reasonable amount into to my pension when I first started working as a contractor and guess what its worth a lowsy 2000 a year in 35 years. As my pot dwindles with the advisors fund commission even though the value of the fund has dropped I am very aware we need our own stash, though theres no room under our beds! Back to Uk company again... another aspect of a Uk pension now is autoenrollment into a pension scheme which will affect small businesses from 1st Jan 2016, the date has just been put back to give smaller businesses chance to prepare. Mind you we did of course forget to mention that another benefit of a Uk company is being able to pay into a private pension and obtain tax relief and tax allowance from a company perspective reducing CT liability.

6

Suz, beware of the pension dream. I paid mine for 32 years and my compensation will eventually be less than I paid in in 6 years? The collapses were foreseeable. Put a tin box under your bed! Safer. As for state pension, because of too much time out of the country the UK will give me £40 something a week as of October, whereas for my German 18 years contribution I am entitled to about £108 a week! From age 60 at that as against in your turn UK already to be age 68 with 70 predicted well within your 35 years. Go shopping for a real deal.

7

absolutely, Hmrc would never allow him to be nonresident and as we spend so much time in France I couldn't live worrying about les impots so we just declare in both and cough up the euros and the pounds.. On the plus side we do build pension entitlement in both countries so in 35 years it will all be worth it of course! ha!

8

I should add my hubby works in the Uk and his client is uk based. They would only employ him through a Uk limited company. He does no work in France for this client and he has a Uk residence too. Effectively he is dual resident, pays and declares in both countries as his family is usually in France.

9

I think, Tracy, you about sum up what I was afraid of. Intentional or unintentional, but end station les impôts, no thanks.

10

Emily, don't do it! I know someone who did this this and she was denounced to lez impots, it is not a good idea. It may be ok by European law but do you want to be the first to challenge it in court? It has been so humiliating for this person even though they were perfectly legal in the UK and has cost an absoute fortune and an unmeasurable amount of stress.

11

:-( sympathy...

12

err its me who sorts it all out Brian, and the architect and the kids and the estate agents abd rsi and les impots.......yes I do have a headache! just done the Vat, companies house return and oops paid Corporation tax late! oh and les impots have just sent me back all my prelevements from last year saying they don't recognise my avis. I digress slightly but it is a pain in the

13

we actually have 2 accountants, one who specialises in our French return and the one in the Uk who deals with the Uk company and payroll.

14

if you are travelling outside of eu to do the work and its not being done in France then the French, should as I understand it have no interest or business in a Uk limited company. You could take Uk salary declar it as revenue etrangees which is covered under double taxation treaty and keep your Ae separate. Benefit of Uk company would be offsetting valid business expenses, travel subsistence, It and telephony costs perhaps...which under ae are not allowable in same way. You would need to work out the difference though longerr term between the 26% or whatever it is now ae charges up to the max turnover threshold and the 20% uk tax 12% employee ni 13.8% employers ni plus 20% corporation tax on profit. xxx just been through it all so understand your concerns totally!

15

Wow, Suz I am soooooooo glad I de-registered. Does Darren have a permanent headache, sounds like it anyway!

16

Emily, if you don't work in the Uk for your Uk company and the work was being done in France you would be at risk of yiur Uk company being deemed to have a French subsidiary...read horrendous accounting headache. Uk contract work through a Uk ltd co works ok if you work in the Uk as you must pay Hmrc and wont be taxed twice due to the double taxation treaty between France and Uk my husband has been doi g this and Ae at the same time although he has now deregistered from Ae as he is now Uk based for most of his work . But the benefits oif having a Uk company are restricted anyway if you want to take dividernds as the french dividend rates of social charges end up costing a fortune if you are dual resident. Definitely use an accountant to advise on different scenarios to minimise charges but at the end of the day if you have a good day rate, thats a start and try not to wince too much at the tax and charges as gutting as they are...I know we lose a lot of my hubbys rate I could rant. p.s. sorry for typos.

17

Actually Companies House are no bother. Once you are registered they leave well alone unless there is something 'bad' arising. The trouble is that compared with other countries they might be too helpful. If you see my point. My friends was just like mine, a single person consultancy but set up as a company to give us the possibility of protection, do a bit of sub-contracting or occasionally employ somebody for a fixed period. Having a company actually (don't know if that has changed) gave a bit of tax relief compared to individual earnings. I am not sure about cotisations but my gut feeling is, if they find out you are registered in the UK then you'll know about it here. I hope somebody else has the answer more clearly than me though.

18

I killed off my company registration in the UK because of the risks it brings with it. Unless you have permanent residence and/or an office for your business in the UK you are in danger of Companies House allowing authorities in other countries finding you. The register of Companies and their owners/directors and basic details like an address are open to all. I got nervous because a Dutch friend was caught out by the Dutch authorities and the pathetic little income he had too was taxed by them together with his Dutch income... Perhaps I ran scared but I let it go in case I was next.