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

Bank Accounts, Company Formations, Tax Planning, Residency Solutions, and more
CALL US ON +971 50 4467827 - TO SETUP YOUR NON-CRS COMPANY STRUCTURE IN DUBAI.

AndyAresa

New member
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 It is first booked as revenue of the Ltd, then expenses are covered, and then 95% of the remaining funds are withdrawn as his salary.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?
 

Sols

Staff member
Mentor Group Gold
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 It is first booked as revenue of the Ltd, then expenses are covered, and then 95% of the remaining funds are withdrawn as his salary.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.
 
Top