UK sales manager of Cyprus company

AlexCh

reader said:

AlexCh said:

reader said:

AlexCh said:

reader said:

No, you are wrong.

Your Cyprus company needs to sign a contract with his limited company (not him).

If you sign a contract with him (not his company) you need to setup a UK branch and PAYE. The bank account you pay into is irrelevant. The contract is more important.

reader said:

No, you are wrong.

Your Cyprus company needs to sign a contract with his limited company (not him).

If you sign a contract with him (not his company) you need to setup a UK branch and PAYE. The bank account you pay into is irrelevant. The contract is more important.

Thank you very much for the clarification.
We thought it was somehow possible to have him on our Cyprus company payroll without establishing any UK legal entities.

For a UK resident UK tax would be due.

There you would need a UK branch operating PAYE or he would need a UK company operating the IR35 rules: https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye81605

Thank you for your reply.
Could you kindly clarify one point.
We rent our sales office in London (our Cyprus company pays for it) and the salesperson (UK LTD company) operates from the office. Does it mean that we have our Permanent establishment and tax residence in the UK in accordance with this
https://www.gov.uk/hmrc-internal-manuals/international-manual/intm264300
and we must register with HMRC
or we are exempt because of this
-CTA2010/S1143 goes on to say that there is no permanent establishment in the UK if the activities here, whether conducted through a fixed place of business or by an agent, are preparatory or auxiliary in character in relation to the business as a whole. The statutory definition includes the activities that are listed as “activities of a preparatory or auxiliary character”

Our lead generation/sales activity is not our main activity, we are not a trading company, we find customers and provide them our services.
Thank you

It is not possible to comment on whether or not you have a permanent establishment in the UK without knowing:
1) What services are you selling?
2) Where the fee earners are based?
3) Are contracts entered into in the UK by the sales manager?
4) Will the office you are renting be just for the sales manager? Or will you be subletting too?

A UK sales agent acting on behalf of a non-UK resident company who continually exercises authority to do business on the company's behalf may create a UK permanent establishment. If contracts are made outside the UK, the company may not be trading in the UK, but this will not be conclusive if there are other factors that are more important.

Thank you for your reply.
1) We provide IT services
2) All developers are based in Europe and our management office is in Cyprus.
3) The person only generates leads and communicates with them. He does not sign any contracts. Our Cyprus company signs contracts with all our clients and invoices them for our services.
4) Yes, we are renting the office only for this person to communicate with potential clients.

reader

Once he has generated the lead who does he pass the lead onto? Where is this person based? What is their role?

Who signs there contract? Where are they?

Do you have the UK premise on your website as a London office?

MarieNoelle

CSan89 said:

You do realise that this forum isn't a free accountancy advice forum but for AAT students/members to discus accountancy matters?

It sounds like your business model is quite complex and I would strongly suggest to hire a UK accountant so they can look into your affairs in more depth because more and more things keep coming out of the woodwork with every post you make.

Just to reiterate what @CSan89 has politely pointed out to you - this is an extract of our Community rules.

Use of the Community
When using the Community, you acknowledge that:
 the views expressed by any individual are those of the individual and do not
necessarily reflect the views of AAT;
 any advice or information posted within the Community should not be regarded as a
substitute for professional advice from AAT, your training provider or other
professional person; and
 any advice given on the Community should not necessarily be accepted as true or
correct, and it is your responsibility to check the validity of any advice before you rely
upon it if the consequences of doing so could be serious.

We have very kindly provided some answers but the advice remains the same - engage a UK accountant. It will be money well spent.

AlexCh

reader said:

Once he has generated the lead who does he pass the lead onto?

Where is this person based? What is their role?

Who signs there contract? Where are they?

Do you have the UK premise on your website as a London office?

Once he has generated the lead who does he pass the lead onto?

To our Director in Cyprus. She prepares the contract and sends to the lead

Where is this person based? What is their role?

In our main office in Cyprus, she is our company director and she signs all contracts.

Who signs there the contract? Where are they?
Our Cypriot director

Do you have the UK premise on your website as a London office?
Yes, London sales office address is indicated on our site.

AlexCh

MarieNoelle said:

CSan89 said:

You do realise that this forum isn't a free accountancy advice forum but for AAT students/members to discus accountancy matters?

It sounds like your business model is quite complex and I would strongly suggest to hire a UK accountant so they can look into your affairs in more depth because more and more things keep coming out of the woodwork with every post you make.

Just to reiterate what @CSan89 has politely pointed out to you - this is an extract of our Community rules.

Use of the Community
When using the Community, you acknowledge that:
 the views expressed by any individual are those of the individual and do not
necessarily reflect the views of AAT;
 any advice or information posted within the Community should not be regarded as a
substitute for professional advice from AAT, your training provider or other
professional person; and
 any advice given on the Community should not necessarily be accepted as true or
correct, and it is your responsibility to check the validity of any advice before you rely
upon it if the consequences of doing so could be serious.

We have very kindly provided some answers but the advice remains the same - engage a UK accountant. It will be money well spent.

Thank you for your post.
I was not trying to violate any rules on the forum.
Sorry if I did it.

reader

I believe the key web-page that you need to consider is: https://www.gov.uk/hmrc-internal-manuals/international-manual/intm266120

If you are going to appoint an accountant to advise you on this matter then you need to make sure that they can support their advice with evidence, are well qualified, are insured, and have experience in the relevant area. You need to make sure all these things are true because it is your business that will suffer if our accountant is wrong.

The problem that you are going to have is that some accountants will say that there is no permanent establishment (PE) in the UK based on the facts that you have presented, and others will say that there is a PE. So you will never get a conclusive answer on the matter and could potentially be wasting money on an accountant should they give you wrong advice.

It would be interesting to get your comments on the above web-page.