Q: I am a UK citizen living overseas with UK bank and Paypal accounts. I own a business in Bolivia and make a number of internet sales via Paypal UK. I withdraw money to my UK bank and transfer this money overseas. Should I register as a UK business?
Oct 20 2010
Answered by: Clive Lewis Ask a question
To give you a definitive answer an adviser would need to know a lot more information about your Bolivia business, its legal structure, your residence and domicile status and what monies are being transferred to your UK bank account. But I can help point you in the right direction.
There are a number of criteria which will determine whether you are resident, ordinarily resident and/or domiciled in the UK and therefore subject to UK taxation. It will largely depend upon how many days and/or part of a day you spend in the UK. So you need to keep a detailed record of the days and part days you are in the UK each week/month and be prepared to justify to HMRC that you are not resident in the UK. Other factors such as having a UK bank account might also contribute to being taxed in the UK.
Assuming you can satisfy HM Revenue & Customs you are non-resident and not subject to UK taxation, the next question is whether it would be advantageous to register as a UK business. This will depend upon whether you pay taxes on your Bolivia business. If you do and you register a UK business you may be able to offset liability to UK taxes with some or all of the amounts of tax you pay in Bolivia. This depends upon the legal structure of the Bolivia and UK businesses (sole trader, partnership or limited company) and whether there is a double-taxation agreement between UK and Bolivia.
Your situation is further dependent upon the nature of the transactions going through your Paypal UK and UK bank account.
This area of taxation can become very complicated and a full appreciation of all the facts of your situation is required. I suggest you seek the advice of a chartered accountant as to whether you are required to register as a UK business or whether it would be advantageous for you to do so. You should seek the advice of a chartered accountant familiar with taxation on non-residents. If you do not have a UK accountant you can find one on at:
www.icaew.com/firms.
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