Moving abroad but keeping ebay shop

paul100uk

My plans are to move abroad but continue to operate my ebay shop. I'll be non resident for tax purposes but do not want to fall foul of a rule where you still pay income tax on income sourced in the UK.

I have 3 choices.

I can post directly from abroad back to the UK (expensive).

I can send orders in bulk back to the UK and get them posted by an individual here (cheaper). 

Or perhaps get someone to pack and send out orders who is based in the UK.

The items for sale have not originated in the UK. They are imports.

[b]Do any of those 3 options come under the rule of 'income sourced in the UK'?[/b]

Secondly, i believe i have to be tax resident somewhere (otherwise you default to being UK tax resident). So i would need to spend at least 183 days in the same country. Is this correct?

Finally...can anyone recommend where i could get specialist tax advice? Income tax specialist may be too broad. Perhaps 'expat tax specialist' if there is such a thing?

Jeremy535897

Your question is complex and will depend on a number of issues:

• the legal form of your business: whether it is a sole trade or a limited company
• whether it would have a branch or agency, or permanent establishment, in the UK by virtue of the delivery of goods
• whether you actually lose your UK residence. See https://www.gov.uk/government/publications/residence-domicile-and-remittance-basis-rules-uk-tax-liability/guidance-note-for-residence-domicile-and-the-remittance-basis-rdr1 and the various onward links
• whether you become resident elsewhere, and if you do, the impact of the double tax agreement between the UK and that country. Each country has its own residence rules, and will not be as straightforward as whether you spend 183 days a year (usually a calendar year rather than our tax year) there
• the impact of VAT/customs duties

One of the major issues with seeking specialist advice is that the cost is prohibitive unless your business venture is very substantial. Major firms of accountants can advise, but the cost is likely to be in the thousands.

Dead_keen

paul100uk said:

My plans are to move abroad but continue to operate my ebay shop. I'll be non resident for tax purposes but do not want to fall foul of a rule where you still pay income tax on income sourced in the UK.

...

Secondly, i believe i have to be tax resident somewhere (otherwise you default to being UK tax resident). So i would need to spend at least 183 days in the same country. Is this correct?

Finally...can anyone recommend where i could get specialist tax advice? Income tax specialist may be too broad. Perhaps 'expat tax specialist' if there is such a thing?

In some cases, it can be harder than you think to be non-resident.  Have a google of "statutory residence test flowchart" to see a high-level outline of the rules.

You don't have to be tax resident somewhere.  If you are not, you don't default to being UK resident (see the flowchart you chose to google).  You can be resident in two countries at the same time under domestic law.  If you want the protection of a double tax treaty between two countries then you do need to be resident in one of them.   

paul100uk

Dead_keen said:

paul100uk said:

My plans are to move abroad but continue to operate my ebay shop. I'll be non resident for tax purposes but do not want to fall foul of a rule where you still pay income tax on income sourced in the UK.

...

Secondly, i believe i have to be tax resident somewhere (otherwise you default to being UK tax resident). So i would need to spend at least 183 days in the same country. Is this correct?

Finally...can anyone recommend where i could get specialist tax advice? Income tax specialist may be too broad. Perhaps 'expat tax specialist' if there is such a thing?

In some cases, it can be harder than you think to be non-resident.  Have a google of "statutory residence test flowchart" to see a high-level outline of the rules.

You don't have to be tax resident somewhere.  If you are not, you don't default to being UK resident (see the flowchart you chose to google).  You can be resident in two countries at the same time under domestic law.  If you want the protection of a double tax treaty between two countries then you do need to be resident in one of them.   

Yes, i had been looking at the statutory resident test and as i have no property, spouse or offspring here then i score quite well for limited ties. If you spend less than 16 days in this country a year then you are automatically non resident according to that test.

Thrugelmir

What's the value of the items to be shipped? 

What would be the bulk value if shipped back to the UK for onward shipping? 

paul100uk

Jeremy535897 said:

Your question is complex and will depend on a number of issues:

• the legal form of your business: whether it is a sole trade or a limited company
• whether it would have a branch or agency, or permanent establishment, in the UK by virtue of the delivery of goods
• whether you actually lose your UK residence.
  
• whether you become resident elsewhere, and if you do, the impact of the double tax agreement between the UK and that country. Each country has its own residence rules, and will not be as straightforward as whether you spend 183 days a year (usually a calendar year rather than our tax year) there
• the impact of VAT/customs duties

One of the major issues with seeking specialist advice is that the cost is prohibitive unless your business venture is very substantial. Major firms of accountants can advise, but the cost is likely to be in the thousands.

Thanks, this is a comprehensive answer.

I would be a sole trader.

I think the UK souced income clause is important here. I looked up permanent establishment. Difficult to avoid that.

"A PE is defined under the UK's domestic legislation as:

1. a fixed place of business (most commonly a branch) through which the company's business is wholly or partly carried on, or
2. an agent acting on behalf of the company, having and habitually exercising authority to do business on behalf of the company—unless it is an independent agent acting in the ordinary course of the agent's business"

Vat/customs also diminishes the profitability of the second route (posting from abroad).

Thanks for the heads up on specialist tax advice. I don't think there is a legal way of doing this unfortuantely.

paul100uk

Thrugelmir said:

What's the value of the items to be shipped? 

What would be the bulk value if shipped back to the UK for onward shipping? 

Low value items. Bulk value still low but my concern would then be that the onward shipper (for posting in the UK) would become an agent for me (the company). I would thus have an establisment in the UK.

I could argue the agent was independent (perhaps they ship other traders goods on too?)

Quote from the UK/Ireland double tax treaty...

The term "permanent establishment" shall not be deemed to include:
(a) the use of facilities solely for the purpose of storage, display or delivery of goods or
merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the enterprise
solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the enterprise
solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of purchasing
goods or merchandise, or for collecting information, for the enterprise.

Thrugelmir

paul100uk said:

Thrugelmir said:

What's the value of the items to be shipped? 

What would be the bulk value if shipped back to the UK for onward shipping? 

Low value items. Bulk value still low but my concern would then be that the onward shipper (for posting in the UK) would become an agent for me (the company). I would thus have an establisment in the UK.

I could argue the agent was independent (perhaps they ship other traders goods on too?)

Quote from the UK/Ireland double tax treaty...

The term "permanent establishment" shall not be deemed to include:
(a) the use of facilities solely for the purpose of storage, display or delivery of goods or
merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the enterprise
solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the enterprise
solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of purchasing
goods or merchandise, or for collecting information, for the enterprise.

I was thinking of the cost of importing the items into the UK from overseas. Or the increased cost of postage directly from Eire. 

Pretending to be based in the UK wil undoubtably break Ebays account terms. 

paul100uk

Thrugelmir said:

I was thinking of the cost of importing the items into the UK from overseas. Or the increased cost of postage directly from Eire. 

Pretending to be based in the UK wil undoubtably break Ebays account terms. 

Eire would be a good option as you could always cross the border (N.Ireland) and get normal UK postage rates.

The idea is to save tax though. Ireland has a similar tax rate to the UK. Ideally you would want to be in a low rate income tax country (Bulgaria 10%), a country which only taxes locally earned income (territorial tax countries -  eg:costa rica,malaysia), or countries with no income tax at all (United Arab Emirates, Bahamas).

The terms and conditions you mostly don't want to break are HMRC's. Ebay can only close your account. 

Dead_keen

If you want to go to a country with low tax, you need to think more about the double tax treaty with the UK.  At the top of this thread, Jeremy mentioned the importance of knowing whether you had a PE in the UK.  As a sole trader, if you have a PE you would be taxed in the UK.  If you didn't have a PE then you wouldn't be. 

But the key to this is that you are resident in a country with a double tax agreement that says that (i.e. says that you will only be taxed in the UK if you have a PE).  Most DTAs do. But if you are not resident anywhere, or the double tax treaty with your tax haven doesn't deal with this, then the threshold for paying tax in the UK is much, much lower. In particularly, you would be taxed on the part of your profits that relate to you carrying on the trade in the UK.  There is a lot of tax history around whether a trade is carried on in the UK or not which can get quite geeky.  Ultimately though, it will be a question of fact as to whether or not it is carried on in the UK.   

Thrugelmir

paul100uk said:

Thrugelmir said:

I was thinking of the cost of importing the items into the UK from overseas. Or the increased cost of postage directly from Eire. 

Pretending to be based in the UK wil undoubtably break Ebays account terms. 

Eire would be a good option as you could always cross the border (N.Ireland) and get normal UK postage rates.

The idea is to save tax though. Ireland has a similar tax rate to the UK. Ideally you would want to be in a low rate income tax country (Bulgaria 10%), a country which only taxes locally earned income (territorial tax countries -  eg:costa rica,malaysia), or countries with no income tax at all (United Arab Emirates, Bahamas).

The terms and conditions you mostly don't want to break are HMRC's. Ebay can only close your account. 

Ebay supply business account information to HMRC on request.  A great source of detecting undeclared taxable income.