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I have recently changed from living in the UK and running a

limited company in the UK...
I have recently changed from living in the UK and running a limited company in the UK to being a sole trader living in Japan.
My work is still mainly within the UK, so the majority of my income is coming from UK companies which is paid into a UK bank account (their preference rather than paying into a Japanese account)

The problem is, I expect to pay tax here because I am a resident here, but the answer from the tax offices here seems to be either 'income that does not enter Japan does not need to be declared' or 'if the money goes into a UK bank account there's no way for us to track it' so there's nothing they can do about it. Does this then leave me with the only option being to demand my UK clients pay me in yen to a Japanese account to keen the tax offices here happy?

or can I register as a UK sole trader even if I am non resident there? or possibly even be on the payrol from a UK company being a non resident since the only difference is that I am working remotely.

I know that I have to pay tax somewhere, and Japan seems like the right place since I'm living here, but is there no way around the bank account problem? does anyone else have experience of this?

thanks for your time.
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Answered in 7 hours by:
4/11/2013
TaxVince
TaxVince, Accountant
Category: UK Tax
Satisfied Customers: 965
Experience: Chartered Accountant >20 years + Qualified IFA
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MamaTax :

Hi Its MamaTax Here!

MamaTax :



Hi there



Thanks for the question. What services/ trade are you in? Does it require you to carry it online/virtual or you have some presence in UK for your UK clients. Do you have clients other than UK?




Regards

Customer: Hi again, it's web design and web development so I am building websites for one main client in the UK (a Design agency), with a couple of other smaller clients both in the UK and Japan. I work via Skype with the design agency in London, building websites to specification and offering consultancy on the technical aspects of their website builds. I also maintain their web servers for the websites that they host for their clients. So they have offered me a fixed contract in order to make invoicing easier both both parties.
Customer:

So yes, it requires me to work online/virtually in order to carry out the work.

MamaTax :



Thanks for the reply. You are in essence tax resident in Japan and you are liable to Japanese tax authorities for your worldwide income and gains. And not to UK tax office. However if there was any tax paid in UK, you could be able to claim a tax credit in Japan under double tax treaty between UK and Japan.

MamaTax :



If your clients are paying directly to your UK bank account there isn’t a bid deal though you could be seen as if you are trading in UK. If you are keen to have GBP currency from clients you can still open Japanese GBP account where you are or if not you can open one offshore in places like Isle of Man, Channel Islands etc – which share same bank names and same UK system- most clients would be comfortable with the banking process there than working with international banks.

MamaTax :



Given that most of the work is done online..it is also worth investigating /considering and depending with Japan tax rates is setting up an offshore company that is resident in low tax jurisdictions like Gibraltar, Isle of Man, Channel Islands where you can provide those services from as long as you meet some steps required to do that. That will save a lot of tax…If anyone has an online business it doesn’t make much tax reasons to set it up in a high tax jurisdiction since an online company can be set up anywhere in the world.



Hope this helps.

MamaTax :





Let me know if you are answered or have any further comments.








 

Customer:

Thanks, ]

Customer:

I guess my next question then is, whats the advantage of having an offshore account in the Isle of man, channel islands etc as opposed to directly in the UK.... my problem at the moment seems to be that I need the money to be coming into a Japanese bank account for the japanese tax authorities to be able to deal with it. Setting up a Japanese GBP account seems to be the best bet, so I need to find the best cross way bank between Japan and the UK, perhaps Shinsei or Citibank. I wonder if having a GBP Japanese account will still be viable for my Uk clients to transfer money into without exorbitant fees. Any advice or experience you could offer in this department would be most welcome... thanks veryt much

Customer:

this may be a good solution:
http://www.survivingnjapan.com/2012/06/how-to-transfer-money-to-and-from-japan.html#comment-858276255

problem is though, I'm not sure I can set up a UK Citibank account now that I'm no longer a Uk resident.

Customer:

this is also helpful:
http://forum.gaijinpot.com/showthread.php?122154-Living-in-Japan-but-work-for-and-paid-by-a-foreign-company&p=1289969&viewfull=1#post1289969

what would you advise based on this?

MamaTax :



Thanks for the reply. I would think all you need to do is call the various banks and find out their requirements for registering a bank account. Transferring to a foreign bank sometimes results in heavy charges that why I thought a Barclays/HSBC/RBS –offshore account will help. For tax to be paid you don’t have to have a local bank account for the money to be taxed, unless the rules there are different from the rest of the countries – where tax is based on accounting records and accrued transactions (and not on cash basis). thanks

MamaTax :

Hi. Are you still there?

MamaTax :

Do you have any further comments.

Customer: No, that's great thanks
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