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bigduckontax
bigduckontax, Accountant
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I'm considering setting up a limited company. Even though

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Hello there,I'm considering setting up a limited company.Even though I'm a Polish citizen, I'm currently living in Glasgow, Scotland, I've got residence permit and working history here, as well as a NIN number.Here are a few complicated things I need help with:- My only clients are from Hong Kong and China, I do some online digital services for them in developing countries such as India, Brazil, Russia (digital advertising, social media promotion etc.).
- My only costs are freelancers that are working for me, one in Turkey, one in Brazil, and one in Russia. They are all sole contractors and they do some local marketing services for my Chinese clients (eg. the Turkish freelancer promotes a brand of my Chinese client on the Turkish market etc, the Russian one does the same on the Russian market and so on). Therefore, I will have no VAT expenses in the UK.
My freelancers will issue invoices for me every month and based on that I will transfer their salary to them.The model I'm considering is the following:
Example: I receive 5k GBP per month revenue from my Chinese clients. Then I will need to pay 1k GBP to 3 of my freelancers. Then I will cover accounting and bank expenses.
What is left (less than 2k GBP) I will pay to myself as company director salary (including the insurance and personal income tax costs).Therefore the company will make no profits and I should pay no corporate taxHere are my questions:
1. Is is OK for a limited company to make no profits and pay zero corporate tax? That is, all money that is left in the company will be paid out as director salary (for which I will pay personal income tax.
2. Will I need to pay any kind of Withholding Tax for the work of my freelancers? The withholding tax issue is some kind of magic to me and I have no idea how it works.
3. Will I need to register for VAT If I have no VAT income and no VAT expenses? (my company's only income will be payments from Chinese clients and my only expenses will be freelancers working abroad and my salary (company director)I will truly appreciate Your advice!

Hello, I am one of the experts on Just Answer and pleased to be able to help you with your question. You seem to have grasped the principles. An UK company need not have British directors, nor, indeed, need they to reside in the UK.

1. No problem at all.

2. No.

3. You do not need to even think about VAT unless the company's turnover apporaches the Threshold in any one year and that is 85K.

I do hope that you have found my reply of assistance.

Customer: replied 2 months ago.
DearCustomer thank You for such a quick response. Coming back to question 3, my Chinese clients might ask me to cover some of their expenses in the countries in question, therefore, the invoicing amounts and freelancer's invoices will increase all at the same time. That is, the numbers might be much higher than in my example and the threshold will be passes. In that case, passing the 85k threshold but still not having any VAT-taxed revenues or expenses, will I be required to register for VAT?
Customer: replied 2 months ago.
coming back to question number 2, my accountant asked me to consult an HMRC tax advisor as she thought I might be subject to Withholding Tax on foreign bank transfers.

If the turnover reaches the VAT Threshold then the company will have to be registered for VAT. However, all the supplies it makes are zero rated exports so although invoices will have to charge VAT the rate of tax will be 0%.

Don't bother, only dividends, interest and fees to foreign entertainers are subject to with holding taxes.

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