Has anyone got experience of contracting for a company that is based in a foreign country?

Question

Hi, 
 I am being offered the opportunity to work for a small company in Canada who have no UK business. They want me to be a contactor (based here in the UK) rather than fully employed as they don't want the trouble/cost of setting up a UK business just for one employee. I have never done contracting before, I have always been employed. I realise that they will need to pay me enough to make up for the lack of the goodies that I get on a salaried job, such as pension contributions, vacation, sick leave and so on. What I don't know is what other questions to ask. 
 I have asked how many people work there, I have asked how the company is funded as I think it's pretty new (2 years ish old) and possibly only 21 people working there. I do know 3 people who work there currently, 1 better than the other two. I have spoken to these people and they're all positive about the firm. I am more worried about the logistics of working in the UK for the foreign company possibly during a rough period when I comes to financial markets and exchange rates. 
 I suppose that I am asking you if you can tell me what I don't know.... I suspect that I am missing a lot here. Can you think of anything I should be asking or thinking about? 
 
 Thanks for any suggestions or thoughts.. 
 All the best, 
 
 Brendan

mapj1 · Answer

Get yourself organized for an hours chat with a local accountant who specializes in setting up new contractors in the UK and doing their tax returns and so on. The fact your customer is in Canada is a complication, but you could bill them to be paid in pounds on the spot rate of the day the bill is sent, so the exchange risk is on their side. 
 But you need to be very clear of the UK side tax implications, and how you organize your own pension, national insurance, business running expenses, sick pay etc. Also under certain conditions a contractor with only one customer can be treated in law like an employee after so many months in the UK , so you may need to do some work for someone else at some point, even if it is one day a year. 
 Mike.

Peter Bernard Ladkin · Answer

Mike's first point, to talk to a chartered accountant, is crucial. You might also consider the option of forming a UK limited company (it only takes a day or so to set one up and there are specialist companies that do this; it helps to use an accountant who has done this already/had it done). This avoids the employee/contractor question that Mike adduced. However, you then have to arrange an hourly or daily fee with your Canadian client (as they would be) and bill them for actual hours worked (and they may or may not be OK with that; if they are not OK with it, then you will have to think hard about why that may be). The accountant will help you get the sums right. You can't really do it by yourself ab initio. 
 I don't see the exchange rate as a problem: you agree with them to bill in GBP and that is what they give your company (there are of course transaction fees, which will have to be acknowledged and agreed).

Has anyone got experience of contracting for a company that is based in a foreign country?

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