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Sam, Accountant
Category: Tax
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Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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Hello. I returned from working in the Middle East earlier this

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Hello. I returned from working in the Middle East earlier this year and since May have been employed as a contractor by a UK based company. I have now been offered a permanent position working from the UK (either from home or from a shared office) but for a company based in Dubai. Could you advise on the correct way to establish a contract with this company? Would it be to set up as a sole trader and then register for self-assessment with the IR?
Thanks for your question
I am Sam and I am one of the UK tax experts here on Just Answer.
Normally I would advise that you will be an employee of this overseas employer, but as they are unable to operate PAYE (as they do not fall within the UK tax regime) you will need to act as proxy employer, to pay yourself with relevant deductions for tax and National Insurance.
And under this usual situations,you cannot be self employed as you will only provide services for this one business and there are strict rules surrounding the employment status of workers.
However as you are a subcontractor - IF this work falls within the Construction Industry (on which CIS would be operated upon) it may well be that HMRC will agree to you being self employed, in spite of the fact you have just one business to whom you provide your services, as in this instance you will also provide your services to many other situated within the UK, but you will need to write to the Status Inspector within HMRC - detailing
1) The work you will undertake
2) How this will be performed and for whom
3) Ask for consideration of self employment for this work due to the location of the engager and the fact that you will fall under the Construction Industry.
If they are agreeable then, yes you would set yourself up as self employed with HMRC -
But you need their agreement to proceed in this way.
If this does not fall within the Construction Industry then it will be employment and you will need to set yourself up with HMRC, for an employer scheme (a PAYE direct payment scheme for tax and national Insurance )
New Employers helpline 0300(###) ###-####
Let me know if you have any follow up questions
Customer: replied 3 years ago.

Thank you Sam. Very comprehensive.

The company is described as an architecture, planning, engineering and technology firm and I would be employed as a transportation consultant (no site work). Do you think that would count as a Construction Industry contract?



Hi Paul
Thanks for your response and the additional information.
I would say you are provided services rather than actual construction work and in my expert opinion are an employee - so should follow setting up the Employer PAYE scheme to have you gross pay be added in through, to then deduct the appropriate tax and National Insurance.
This being the case I would advise this
1) You need to be aware that this will not just advise the deductions of Employee tax and National Insurance, which you would expect to pay but also Employer National Insurance, so ensure this additional "salary" is built in with what the company in Dubai pay you, as you should NOT be out of pocket with this situation. If you advise me the figure you would expect to be paid (gross) per year, I can advise the additional money for the Employer National Insurance
2) AS you would have to operated the payroll, and submit reports to HMRC and pay over (monthly) the tax and National Insurance deducted (both employee and employer) whether the company in Dubai will also build in paying you additional money for running the payroll and any postage/costs to make the payment to HMRC
Finally ensure all of this is built into the contract (along with annual leave etc) so you are fully protected with all UK obligations and your own (equally as important!)
If they need anything to support your request/needs - then I have added a link here that offers more details on employment status
This link looks at UK employees working for a foreign employer (along with other matters such as embassies etc) - it does look mainly at the National Insurance position, but the premise is the same for both tax and National Insurance
Let me know if you have any follow up questions, if not, it would be appreciated if you could rate/accept the answer, as this ensures that Just Answer credit me for my time.
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