UK Company and a Non-Resident Director. PAYE/Tax

xzars

Trusted Member
Business Angel
Hello,

I've been using UK companies as a non-resident director and sole shareholder for 10+ years.

There has never been any corporate income tax liability because the UK company is rendered non-resident under applicable tax treaty. But recently, I started to doubt in regards to personal income tax liability, filing obligations.

1. According to HMRC guidance, the days a non-resident director spends in the UK should be proportionally taxed under PAYE. Even if I spend just 1 day in the UK, a small percentage of my annual remuneration (of all my UK companies) should be taxed in the UK. No protest, it sounds perfectly fair, because the income is then made in the UK. I paid proportional tax in the UK for this exact reason.
2. What if the non-resident director spends 0 days in the UK? Again, according to HMRC guidance, the non-resident director of a UK company should always file a personal income tax return in the UK. Personally, I've never done that in such years, and it does not sound reasonable at all. I'm even on the opinion that HMRC guidance is wrong.

There's a lot of conflicting information on the topic. Google's 1st and 2nd result are outright wrong, although the information is written by reputable law firms. Other law firms seem to be on the opinion that no personal income tax return should be filed in the UK unless the non-resident director either has tax liability in the UK, or if he spent at least 1 day of that tax year in the UK.

HMRC is pretty much useless on this topic because they won't argue or explain. They keep sending me back to documents I don't agree with.

Question: The fact that a non-resident director received remuneration from a UK company does not create personal income tax liability in the UK. The non-resident director has no obligation to file a tax return in the UK unless he spent at least 1 day of that tax year in the UK. True or false, and why?
 
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xzods

New Member
I'm in the same problem right now. I don't see why there should be taxes paid in the UK if there's no PE there nor any performed duty. Setting up a UK agency would've been better I think. How do you deal with corp tax please ?
 

xzars

Trusted Member
Business Angel
I'm in the same problem right now. I don't see why there should be taxes paid in the UK if there's no PE there nor any performed duty. Setting up a UK agency would've been better I think. How do you deal with corp tax please ?
What do you mean "deal with corp tax"? I don't pay CIT in the UK. There is no UK PE, no UK dependent agent working on behalf of my business, and no UK property-related income. I've been once asked for the tax residency certificate.
 

fshore

Trusted Member
Business Angel
You only pay tax and PAYE to UK if you have directors meetings in the UK. You should file a tax return if they send you a request to file a tax return.

Did you inform HMRC that the company is not tax resident in the UK due to a tax treaty and they accepted that? If so it would not make sense to pay personal tax to UK due to having UK directors meetings (which would probably make the company UK resident).

Anyway, the easier way to do it is to have the UK company resident but not perform any directors services in the UK. Then the company is still UK tax resident, but your personal salary (directors or regular) is not taxed in the UK.
 

WoWNull

Building Trust
Entrepreneur
hmmm interesting
i am having ltd and some accountant says i may need to pay taxes bcuz i am the director of the company even if i am not an uk resident
 

xzods

New Member
@WoWNull I also want to know what's the correct % of Corp Tax and Personal income tax in case of :
- No PE in the UK
- 1 Single non resident director
- 0 days spent on the UK
- The only tie to the UK is the UK incorporated company
 

fshore

Trusted Member
Business Angel
@WoWNull I also want to know what's the correct % of Corp Tax and Personal income tax in case of :
- No PE in the UK
- 1 Single non resident director
- 0 days spent on the UK
- The only tie to the UK is the UK incorporated company
The company is taxable in the UK (provided its a Ltd company). Your personal salary is not taxable if you don't work in the UK.
 

WoWNull

Building Trust
Entrepreneur
The company is taxable in the UK (provided its a Ltd company). Your personal salary is not taxable if you don't work in the UK.
then why people tell me you need to pay tax =_= or u only allow to take 12k per year which is under the non taxable
 
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