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

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

  • 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.

  • 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). 

  • Engaging an accountant sounds like great advice. The billing thing makes sense to me, trying to put the risk on them rather than me. I didn't know that a contractor cannot simply work for a single client in UK Law. That's interesting.  Thanks.

  • The UK limited company sounds like a plan, but now I starting to think that since they don't want this hassle of setting up a UK business, that it has now fallen to me. I am now taking this hit, perhaps I should be pushing back on them to do this. Although if I do set up the UK limited company I guess it gives me scope to do other things and perhaps to employ people and so on. Thanks for this advice. Now I need to do some sole searching into what I really want to do and what do i really want to take on.

  • Once you know what is going on, keeping the company going is not a huge amount of work if it remains small (1-3 people). I have both England&Wales and German limited companies. The E&W is easy. The German one with two employees, by contrast, is serious hassle.

  • Agree with Peter, - a surprising number of UK companies exist that are one person at a residential address, that seem to own one desk and one car ,and submit half a side of A4 to companies house each year shewing profits or losses so small as to not trouble the scorers.

    Again any accountant who specializes  in contracting companies will be on the ball with the pros and cons of various approaches and any recent changes to regulations. I have been told the UK  is a lot easier than a Canadian or US company registration, though personally I do not know.

    (some of the cheap options are so cheap you have to wonder quite what is missing ... )

    Mike

  • My feeling is now very much that if they're so keen to have me than they can go through this rather than me. If I wanted to contract or run my own company I'd probably be doing it by now. But I'd rather be simply employed.. With your information I think I have an answer to whether I want to take this opportunity.. Thanks.