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One example is that we seem to need to send clients a significantly complicated form they can use if the IRS ask to confirm that we’re paying tax on earnings he

One example is that we seem to need to send clients a significantly complicated form they can use if the IRS ask to confirm that we’re paying tax on earnings here in the UK so they aren’t required to deduct anything at source. Another is that my company’s professional insurance costs would apparently increase significantly if we did any business with US clients.

gregjor 4y ago
The IRS has no jurisdiction with UK taxes. If you aren’t US citizens or permanent residents you aren’t subject to US taxes. The customer is not obligated under US law to comply with foreign tax obligations. Paying your taxes in the UK is your responsibility — your US customers have no obligation unless you are considered employees or they have a presence in the UK that creates a tax responsibility there (usually called “nexus”). What professional insurance does a freelancer need? In 15 years freelancing I got asked about errors and omissions insurance exactly once. I told the customer they would have to cover that since it’s an unusual requirement. Larger companies and government agencies demand that kind of thing, not my customer base.
- Chris_Newton 4y ago
  The customer is not obligated under US law to comply with foreign tax obligations. Are there not withholding obligations under US tax rules for the customer, though, unless they have something like a W-8BEN or W-8BEN-E? I’m by no means an expert in this area, but my understanding was that without providing the official paperwork, the customer would be required to deduct US taxes for US-sourced income before paying their bill. What professional insurance does a freelancer need? We carry professional indemnity, among other things.
  - gregjor 4y ago
    I’m a US citizen and not a tax expert. You should get professional advice. The US and UK have tax treaties that may/should exempt you and your company from dual taxation. I’ve never heard of US companies withholding taxes for foreign freelancers but don’t take my word on that. If you’re working remotely the only liability you can have is breach of contract, which is covered by law. E&O (errors and omissions) coverage exists but I have been asked about that exactly once and when I said I don’t have it and won’t pay for it the customer dropped the issue. Because of the time and expense involved even between two US-based parties in our legal system I think it’s best to avoid situations that can lead to such disputes. That’s why I don’t do green fields projects with big up-front payments or deposits.
    - Chris_Newton 4y ago
      It was the expert advice that warned me about the odd tax situation. My current understanding is that the UK and US do have a tax treaty and it does mean we don’t have to get double-taxed for this kind of engagement, but to avoid it there is a particular form we have to give to any US-based client that they keep as evidence of the above so they don’t have to deduct US tax at source before paying us. But as you say, if anything like this ever went ahead, this is definitely a taking-professional-advice situation, particularly if that form is at all tricky to fill out.

gregjor 4y ago

The IRS has no jurisdiction with UK taxes. If you aren’t US citizens or permanent residents you aren’t subject to US taxes. The customer is not obligated under US law to comply with foreign tax obligations. Paying your taxes in the UK is your responsibility — your US customers have no obligation unless you are considered employees or they have a presence in the UK that creates a tax responsibility there (usually called “nexus”). What professional insurance does a freelancer need? In 15 years freelancing I got asked about errors and omissions insurance exactly once. I told the customer they would have to cover that since it’s an unusual requirement. Larger companies and government agencies demand that kind of thing, not my customer base.

Chris_Newton 4y ago
The customer is not obligated under US law to comply with foreign tax obligations. Are there not withholding obligations under US tax rules for the customer, though, unless they have something like a W-8BEN or W-8BEN-E? I’m by no means an expert in this area, but my understanding was that without providing the official paperwork, the customer would be required to deduct US taxes for US-sourced income before paying their bill. What professional insurance does a freelancer need? We carry professional indemnity, among other things.
- gregjor 4y ago
  I’m a US citizen and not a tax expert. You should get professional advice. The US and UK have tax treaties that may/should exempt you and your company from dual taxation. I’ve never heard of US companies withholding taxes for foreign freelancers but don’t take my word on that. If you’re working remotely the only liability you can have is breach of contract, which is covered by law. E&O (errors and omissions) coverage exists but I have been asked about that exactly once and when I said I don’t have it and won’t pay for it the customer dropped the issue. Because of the time and expense involved even between two US-based parties in our legal system I think it’s best to avoid situations that can lead to such disputes. That’s why I don’t do green fields projects with big up-front payments or deposits.
  - Chris_Newton 4y ago
    It was the expert advice that warned me about the odd tax situation. My current understanding is that the UK and US do have a tax treaty and it does mean we don’t have to get double-taxed for this kind of engagement, but to avoid it there is a particular form we have to give to any US-based client that they keep as evidence of the above so they don’t have to deduct US tax at source before paying us. But as you say, if anything like this ever went ahead, this is definitely a taking-professional-advice situation, particularly if that form is at all tricky to fill out.