Moving abroad but keeping ebay shop

Jeremy535897

Dead_keen said:

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.   

I totally agree, and apologise for not following up earlier, but have only just got power after 5 days.

paul100uk

Thrugelmir said:

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.  

Yes, so hence the need to keep it all above board and be in a situation where tax is not due to HMRC. Be based abroad in a country with low income tax. Post in bulk to an agent in the UK perhaps? Someone who can simply forward your orders on.

paul100uk

Dead_keen said:

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.   

Going back to the flow chart i would be domiciled in the UK by my birth, my fathers nationality and the fact i am not permanently emigrating. For those domiciled in the UK these are the rules.

	UK resident	Not UK resident
Arising or remittance basis claimed	Arising basis	Arising basis
Employment duties wholly or partly in the UK but duties performed in the UK	Liable	Liable
Employment duties wholly or partly in the UK but duties performed outside the UK	Liable	Not liable
Employment duties wholly outside the UK with UK resident employer	Liable	Not liable
Employment duties wholly outside the UK with overseas resident employer	Liable	Not liable
Trade or profession wholly or partly in the UK with profits arising in the UK	Liable	Liable
Trade or profession wholly or partly in the UK with profits arising outside the UK	Liable	Not liable
Trade or profession carried on wholly outside the UK	Liable	Not liable
UK Pension	Liable	Liable
Non-UK (overseas) pension	Liable	Not liable
Investment income from a UK source	Liable	Liable
Investment income from a non UK source	Liable	Not liable

Using a UK bank may mean profits arising in the UK still. It's a difficult call without getting specialist tax advice.

Dead_keen

First, it's all about whether you are resident in the UK and it doesn't sound like you looked at th residence flowchart (you looked at the domicile one).  Here's the first flowchart that came up on google: https://assets.kpmg/content/dam/kpmg/pdf/2016/01/statutory-residence-test-flowchart.pdf (there are other ones out there).

If you are not resident in the UK then it is all about whether your trade is carried on wholly or partly in the UK.  That will be based on what the actual facts are.  A UK bank account is pretty low on the list of factors that are likely to determine whether a trade is carried on in the UK or not.  For the avoidance of doubt though, there is no "list" of factors.  It's a bit like an elephant test.  You step back and look at things at a whole.  HMRC's comments on that are here but they are probably not that helpful to you: https://www.gov.uk/hmrc-internal-manuals/international-manual/intm263000  

For the avoidance of doubt, If you are (i) resident, and (ii) not domiciled in the UK, (iii) the remittance basis applied, and (iv) your trade is carried on wholly outside the UK then the UK bank account might be relevant.  But those don't seem to be your facts.


Edited to add "not" in (ii).

Jeremy535897

Dead_keen said:

First, it's all about whether you are resident in the UK and it doesn't sound like you looked at th residence flowchart (you looked at the domicile one).  Here's the first flowchart that came up on google: https://assets.kpmg/content/dam/kpmg/pdf/2016/01/statutory-residence-test-flowchart.pdf (there are other ones out there).

If you are not resident in the UK then it is all about whether your trade is carried on wholly or partly in the UK.  That will be based on what the actual facts are.  A UK bank account is pretty low on the list of factors that are likely to determine whether a trade is carried on in the UK or not.  For the avoidance of doubt though, there is no "list" of factors.  It's a bit like an elephant test.  You step back and look at things at a whole.  HMRC's comments on that are here but they are probably not that helpful to you: https://www.gov.uk/hmrc-internal-manuals/international-manual/intm263000  

For the avoidance of doubt, If you are (i) resident, and (ii) domiciled in the UK, (iii) the remittance basis applied, and (iv) your trade is carried on wholly outside the UK then the UK bank account might be relevant.  But those don't seem to be your facts.

In what circumstances does the remittance basis apply to the trading income of individuals both resident and domiciled in the UK?

Dead_keen

Jeremy535897 said:

Dead_keen said:

First, it's all about whether you are resident in the UK and it doesn't sound like you looked at th residence flowchart (you looked at the domicile one).  Here's the first flowchart that came up on google: https://assets.kpmg/content/dam/kpmg/pdf/2016/01/statutory-residence-test-flowchart.pdf (there are other ones out there).

If you are not resident in the UK then it is all about whether your trade is carried on wholly or partly in the UK.  That will be based on what the actual facts are.  A UK bank account is pretty low on the list of factors that are likely to determine whether a trade is carried on in the UK or not.  For the avoidance of doubt though, there is no "list" of factors.  It's a bit like an elephant test.  You step back and look at things at a whole.  HMRC's comments on that are here but they are probably not that helpful to you: https://www.gov.uk/hmrc-internal-manuals/international-manual/intm263000  

For the avoidance of doubt, If you are (i) resident, and (ii) domiciled in the UK, (iii) the remittance basis applied, and (iv) your trade is carried on wholly outside the UK then the UK bank account might be relevant.  But those don't seem to be your facts.

In what circumstances does the remittance basis apply to the trading income of individuals both resident and domiciled in the UK?

Thanks for spotting the typo.  It should have said "... (ii) not domiciled in the UK, (iii) ...".    An example of this would be for a partner (who is treated as being self-employed) where the trade is managed and controlled outside the UK - s857.

Jeremy535897

Dead_keen said:

Jeremy535897 said:

Dead_keen said:

First, it's all about whether you are resident in the UK and it doesn't sound like you looked at th residence flowchart (you looked at the domicile one).  Here's the first flowchart that came up on google: https://assets.kpmg/content/dam/kpmg/pdf/2016/01/statutory-residence-test-flowchart.pdf (there are other ones out there).

If you are not resident in the UK then it is all about whether your trade is carried on wholly or partly in the UK.  That will be based on what the actual facts are.  A UK bank account is pretty low on the list of factors that are likely to determine whether a trade is carried on in the UK or not.  For the avoidance of doubt though, there is no "list" of factors.  It's a bit like an elephant test.  You step back and look at things at a whole.  HMRC's comments on that are here but they are probably not that helpful to you: https://www.gov.uk/hmrc-internal-manuals/international-manual/intm263000  

For the avoidance of doubt, If you are (i) resident, and (ii) domiciled in the UK, (iii) the remittance basis applied, and (iv) your trade is carried on wholly outside the UK then the UK bank account might be relevant.  But those don't seem to be your facts.

In what circumstances does the remittance basis apply to the trading income of individuals both resident and domiciled in the UK?

Thanks for spotting the typo.  It should have said "... (ii) not domiciled in the UK, (iii) ...".    An example of this would be for a partner (who is treated as being self-employed) where the trade is managed and controlled outside the UK - s857.

I thought it must have been a typo, but I did think long and hard before posting!

paul100uk

Dead_keen said:

First, it's all about whether you are resident in the UK and it doesn't sound like you looked at th residence flowchart (you looked at the domicile one).  Here's the first flowchart that came up on google: https://assets.kpmg/content/dam/kpmg/pdf/2016/01/statutory-residence-test-flowchart.pdf (there are other ones out there).

If you are not resident in the UK then it is all about whether your trade is carried on wholly or partly in the UK.  That will be based on what the actual facts are.  A UK bank account is pretty low on the list of factors that are likely to determine whether a trade is carried on in the UK or not.  For the avoidance of doubt though, there is no "list" of factors.  It's a bit like an elephant test.  You step back and look at things at a whole.  HMRC's comments on that are here but they are probably not that helpful to you: https://www.gov.uk/hmrc-internal-manuals/international-manual/intm263000  

For the avoidance of doubt, If you are (i) resident, and (ii) not domiciled in the UK, (iii) the remittance basis applied, and (iv) your trade is carried on wholly outside the UK then the UK bank account might be relevant.  But those don't seem to be your facts.


Edited to add "not" in (ii).

The residence requirement is easier to hit than the domicile one. You are automaticaly non resident if only inside the UK for 16 or less days. If working full time abroad (self employed ebayer ok?) you can get up to90 days in the UK before being declared resident.

Outside of that then the 'ties' to the UK come into play.

From that link this passage is interesting...

Identifying the profit-making activities and where performed

"Where contracts are made abroad, that fact is not conclusive against trading in the UK by the non-resident. The trade will be exercised in the UK if there is significant economic activity here contributing to the making of profits. In the case of selling goods in the UK, there is likely to be trading here if in substance the selling takes place here even if formal conclusion of contracts takes place abroad."

I could argue that the selling takes place where i am (or even where ebay server is). Economic activity is limited to items being dispatched from within the UK. They would counter with the fact items are being sold on ebay UK to (primarily) UK buyers and profits going to a UK bank account (as it stands).

I wonder if writing to HMRC would give a definitive answer? Contact with HMRC would show i was attempting to stay within the law (if it ever comes to a future case against me for a inaccurate declaration)

Jeremy535897

paul100uk said:

Dead_keen said:

First, it's all about whether you are resident in the UK and it doesn't sound like you looked at th residence flowchart (you looked at the domicile one).  Here's the first flowchart that came up on google: https://assets.kpmg/content/dam/kpmg/pdf/2016/01/statutory-residence-test-flowchart.pdf (there are other ones out there).

If you are not resident in the UK then it is all about whether your trade is carried on wholly or partly in the UK.  That will be based on what the actual facts are.  A UK bank account is pretty low on the list of factors that are likely to determine whether a trade is carried on in the UK or not.  For the avoidance of doubt though, there is no "list" of factors.  It's a bit like an elephant test.  You step back and look at things at a whole.  HMRC's comments on that are here but they are probably not that helpful to you: https://www.gov.uk/hmrc-internal-manuals/international-manual/intm263000  

For the avoidance of doubt, If you are (i) resident, and (ii) not domiciled in the UK, (iii) the remittance basis applied, and (iv) your trade is carried on wholly outside the UK then the UK bank account might be relevant.  But those don't seem to be your facts.


Edited to add "not" in (ii).

The residence requirement is easier to hit than the domicile one. You are automaticaly non resident if only inside the UK for 16 or less days. If working full time abroad (self employed ebayer ok?) you can get up to90 days in the UK before being declared resident.

Outside of that then the 'ties' to the UK come into play.

From that link this passage is interesting...

Identifying the profit-making activities and where performed

"Where contracts are made abroad, that fact is not conclusive against trading in the UK by the non-resident. The trade will be exercised in the UK if there is significant economic activity here contributing to the making of profits. In the case of selling goods in the UK, there is likely to be trading here if in substance the selling takes place here even if formal conclusion of contracts takes place abroad."

I could argue that the selling takes place where i am (or even where ebay server is). Economic activity is limited to items being dispatched from within the UK. They would counter with the fact items are being sold on ebay UK to (primarily) UK buyers and profits going to a UK bank account (as it stands).

I wonder if writing to HMRC would give a definitive answer? Contact with HMRC would show i was attempting to stay within the law (if it ever comes to a future case against me for a inaccurate declaration)

I doubt you would get anywhere.

Dead_keen

paul100uk said:

From that link this passage is interesting...

Identifying the profit-making activities and where performed

"Where contracts are made abroad, that fact is not conclusive against trading in the UK by the non-resident. The trade will be exercised in the UK if there is significant economic activity here contributing to the making of profits. In the case of selling goods in the UK, there is likely to be trading here if in substance the selling takes place here even if formal conclusion of contracts takes place abroad."

I could argue that the selling takes place where i am (or even where ebay server is). Economic activity is limited to items being dispatched from within the UK. They would counter with the fact items are being sold on ebay UK to (primarily) UK buyers and profits going to a UK bank account (as it stands).

Let's assume that HMRC's brief statement is an accurate description of the law.  They say "if there is significant economic activity here contributing to the making of profits" then the trade will be exercised (at least in part) in the UK.  They then go one to give one example of where it would be carried on in the UK.  For these purpopses, I'd be happy to accept that completing a sale on eBay isn't enough to mean that the trade is carried on in the UK.  But the question then is whether (using the wording in HMRC's brief summary) there is "significant economic activity" in the UK.  You say that "Economic activity is limited to items being dispatched from within the UK".  That seems to be a significant part of your trade.  So that seems to say that you would be carrying on activity in the UK.

While HMRC's brief bit of guidance is not the law, if we accept for the moment that it is, it does beg the question of what is and is not significant.  Some examples of what is not significant might be:

1. You answer an email at Heathrow while transferring flights from New York to Faro. I'd be happy that that does not amount to carrying on a trade partly in the UK.

2. You are on holiday in the UK and you briefly reply to a customer who has a dispute.  That's probably fine.

3. You fly in to the UK and spend a week meeting new suppliers.  This gets interesting.  This is where my elephant (or multi-factorial) test comes in.

4. You employ someone in the UK to store good, dispatch them and deal with returns.  That sounds like carrying on a trade at least partly in the UK. 

HMRC may give clearance where the law is uncertain.  They are not supposed to comment where there is uncertainty about factual things (like are you carrying on a trade in the UK) and my experience is that they do not.  I doubt if sending a letter to HMRC would protect you from penalties.  You will be far better off taking proper professional advice and making a disclosure on your tax return.