Can I myself have two contracts with my own UK ltd company?


1

I'm soon going to register a limited company in the UK. I know that any ltd company is a separate entity, and if I want to get paid from the company I'll have to be employed as its director. However, would it be legal for me to sign a contract in the UK and another one in Poland (where I'm from)? As a director I would have a conctract in England, but I am also a web designer and would like to sell the website I create to the company. In Poland there are so-called "contracts for a specific work" (German: Werkvertrag) and a freelancer doesn't have to be registered as a self-employed. It's enough to sign a contract and sell the work to whoever you deal with. I know that according to the EU laws if a company and its contractor come from different countries, the company can decide on which legal system to choose (in this case: English or Polish). I'm not sure whether there are any restrictions or not.

UK Company Tax Ltd

asked Feb 5 '12 at 08:43
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Lukeshek
452 points

3 Answers


1

...if I want to get paid from the company I'll have to be employed as
its director

That isn't really correct. If you want to "get paid" from a UK Ltd company, you have several options (three, at least).

  1. Draw salary, where you are an employee, which is what I think you refer too
  2. Receive dividends as a shareholder
  3. Sell the company and realise a capital gain

Each of these has tax implications, but in general terms 1) is the least tax-efficient and 3) is the most tax-efficient, but many people choose option 2) as it is the best compromise between tax and time.

In all cases, you needn't be a director of the company, although you can be.

answered Jul 6 '12 at 17:50
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Steve Jones
3,239 points

1

I am not an expert, but this sounds illegal.

I think you could have two contracts for different aspects of your relationship with the company. But I can't think of a good reason why you'd do this.

As I see it there's a big problem: If you live in the UK you are likely subject to UK tax laws, whatever contract you are working to. As a company director you have to file a tax return and on it you'd have to declare your "Werkvertrag" activity which would either be treated as employment or self employment. Worse case you end up paying Polish AND British tax. Plus there's the possibility of interest, fines and you may get a criminal record.

International tax can be complex. Either do things the conventional way for where you live (plenty of information for UK freelancers online) or get a good professional tax adviser. And focus on your business, not tax evasion.

Disclaimer: IANAL, IANATA

answered Jul 6 '12 at 18:41
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Paperjam
394 points

0

Yes, you as a director can enter into one or more contracts. Also your company can enter into one or more contracts. You are bound by the terms of that contract. The terms of that contract shouldn't be affected by the laws of the country unless you are breaking them (which makes the contract invalid.) If you comply to all the laws of both countries (which you should be) then you're fine.

Also on a septate note probably the most tax effective way is to pay yourself a very small wage (at exactly the personal allowance amount). You can then pay dividends on the profit your company makes.

(NB. I'm not a lawyer. You take my advice at your own risk :) )

answered Feb 7 '12 at 01:13
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Tom Squires
1,047 points
  • Thank you for your answer! Yes, I'm aware of the taxes. The so-called "contracts for a specific work" are taxed at only 18% of which I can claim 50% back as production costs. – Lukeshek 7 years ago
  • Wow, that's a great tax rate. – Tom Squires 7 years ago

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