Working remotely for a US company

[LA_Mike]

My current employer has offered me the opportunity to work remotely from London while I look for a position locally (or if it works well for both myself and my employer it may become a more permanent arrangement).

I think I'd be allowed to do this under HSMP if I set myself up as an independent contractor in which case I'd pay NI and other self employement taxes but I'm not certain about the legality or tax consequences of continuing being a direct employee (my employer has no other employees in the UK).

Has anyone else done this?

I would also welcome recommendations for solicitors or other consultants who could assist me. Please PM me, since otherwise it may be considered a public advertisment, which are against the policy of the board.

[Cosmopol]

Mike,

I think the 'remote' scenario could work if you invoice the US firm for your services, the invoice bears your UK address, and the funds are transferred to a UK bank account. Perhaps, you could even open a firm for this.

If you operate as a W-2 employee of an American business, they must deduct your federal, state and any local taxes from every check, and thus you would not be contributing to the UK economy and Inland Revenue. Even if you work as a subcontractor, but still receive a US-bank-drawn check, your employer would have to report your income to the IRS on form 1099, and they'd still expect your tax payment.

Of course, due to a developed dual taxation regulation between the 2 countries, one could probably work out a way to pay taxes in the UK on income paid in the U.S. (as far as IRS is concerned), but it seems a slippery ground to me - HSMP may question your economic integration and lack of develping ties with the UK economy.

Hope this helps, albeit in a non-specific way...