Use of a single-member UK Ltd by a non-UK resident for B2B services

[AndyAresa]

Greetings to everyone,

Has anyone had any experience with a UK Ltd owned and managed by a sole non-UK resident?

E.g. a B2B consultant wants to incorporate a UK Ltd to provide his services. No employees, possibly just a few external contractors. The same person owns 100% shares and is the sole director. Since all of the consulting work is carried out by himself, it seems ok to withdraw most of the revenue as his salary. As all the work is carried out outside the UK by a person non-resident in the UK, such employee should not be subject to tax in the UK. Of course, he would have to settle his taxes in his country of residence, but that is another matter.

So e.g. his consulting revenue is 100,000 USD a year. It is first booked as revenue of the Ltd, then expenses are covered, and then 95% of the remaining funds are withdrawn as his salary. The rest, 1-2k USD, gets taxed in the UK. Does it look ok from the UK perspective, what is your opinion?

 

[Marzio]

Does it look ok from the UK perspective, what is your opinion?

The UK LTD has to pay 19% CIT on the income generate from the consulting.

 

[AndyAresa]

The UK LTD has to pay 19% CIT on the income generate from the consulting.

yes, 19% on the income after deduction of expenses, so it presumably will be 19% on the 1k profit.

 

[Marzio]

yes, 19% on the income after deduction of expenses, so it presumably will be 19% on the 1k profit.

Sorry i read your post while still in bed, i didn't connected that salary will be deducted as expense LOL

I think it coud work.

 

[joffreylol]

I'm curious as well. For this type of work I think Estonian company would also be good option. They explain better in which situation it's okay to withdraw most of the income as salary (that's employee salary, not board member salary which is taxed in Estonia) Frequently asked questions | Xolo FAQ

 

[Sols]

As all the work is carried out outside the UK by a person non-resident in the UK, such employee should not be subject to tax in the UK.

This is generally correct, but there are situations where PAYE could still apply (if you have certain ties to the UK or move/plan to move to the UK).

Non-residents are usually not hired as employees but as service providers. Being an employee could also mean you are hit with social security contribution requirements in your home country which may not apply if you are a service providers. It's a distinction worth discussing with advisers just to make sure you pick the over all best setup, if you haven't already.

So e.g. his consulting revenue is 100,000 USD a year. It is first booked as revenue of the Ltd, then expenses are covered, and then 95% of the remaining funds are withdrawn as his salary. The rest, 1-2k USD, gets taxed in the UK. Does it look ok from the UK perspective, what is your opinion?

For the amount mentioned, it sounds reasonable. However, if the salary gets too high (not in line with market rates to an egregious degree) and you keep leaving little to nothing in the company, you might run into issues with the HMRC perceiving your salary as a means to evade corporate income tax. It's rare but it does happen.

 

[ilpablo]

What about the issues you might have in your country of residence for owning and managing a foreign company with no substance in the UK while being there?

 

[lostguy]

Has anyone had any experience with a UK Ltd owned and managed by a sole non-UK resident?

many times, no problem at all to do so. You can ask an agent like @James Turner to handle everything for you.