Registering as a UK based soletrader that operates abroad

Discussion in 'Accounting and Legal Advice' started by laurakahane, Feb 18, 2012.

  1. laurakahane

    laurakahane New Member

    Hi there,
    I wonder if you can offer me some advice?
    I am just about to register as a soletrader (UK based tour operator), that operates in Sri Lanka. We will be offering eco-adventure/culture based tours of the country (tailor-made packages) tours and volunteering projects across the country. We expect start up to be slow and to earn a maximum of between 20-30k per annum, so far off of the VAT threshold. I will be living in Sri Lanka (and working) for between 6-8 months per year. We will not be offering flights. Instead of forming as a partnership, I will be sharing 50% of the profits with the Sri Lanka coordinator, that is based out there. My questions to you are;

    1. Are there any problems concerning legality, in registering as a soletrader in the UK (for this type of business) and operating in Sri Lanka? Obviously the vast majority of clients will come from the UK, followed closely by the US and Germany.

    2. As we won't be offering flight, are there any compulsory trade organisations that we must register with/become a member of in order to trade like this. I.e for insurance purposes/to protect the clients money? I have heard of ATOL, but is it still compulsory for non-flight offering UK based tour companies.

    3. Would this kind of company be classed as UK registered, but 'overseas'?

    Any advice would be greatly appreciated!

    Kind regards

    Laura Kahane
  2. WahIdeas

    WahIdeas New Member

    I would strongly suggest you talk to an accountant or lawyer about this! I'm a registered company in Canada, but have done quite a bit of work for UK companies...I pay tax in Canada...but that's my scenario [​IMG] I would seek professional advice on this one!
  3. talfighel

    talfighel Silver Member

    Where you live, ask for a professional advice. Maybe your accountant or even a lawyer. You want to do things right and not break any laws.
  4. NetMecca

    NetMecca Member

    You are taxed in the country you operate (are registered in), and your legal form and protection will be governed by the country your are registered in. There are some exceptions in that if you open offices on foreign soil serving customers from those countries, you may have to register your business there as well, and pay taxes there on income earned there.

    If you get sued (cross border) they have to sue you in your country of registration (VERY EXPENSIVE) (unless an agreement or terms state otherwise - you can specify the country law under which all transactions you do are judged, however realise that it is considerably easier to keep it the same as the country you are registered in.)

    The question for your operation in another country goes more towards who your clients will be, and who can sue you for wrong doing. If you clients are UK based, then I would pay attention to UK rules and laws. I would also buy insurance accordingly. And although technically breaking the law in another country may not necessarily prove a significant issue for your home based clients, it may be used as a beating stick in court (showing character).

    Also realize that there are two types of law to consider here :
    1. Criminal
    You can land in jail for doing something wrong. Again for operations on foreign soil when all is said and done the worst they can do is deport you and refuse you future entry. (besides the discomfort of it all) So here I would reach out to laywers (& immigration) in the country where you wish to operate, as they will be able to advise you any criminal issues (including not having the proper tour guide licenses if they exist) As a foreign operation you may not be subject to the same rules (unless you actually establish an office in the foreign country.)
    So this may be driven by a physical presence in the country, and of course again who your are serving. Laws in countries are usually designed to protect their citizens and rarely care as much about what foreigners do, unless it affects their citizens.

    2. Civil
    Someone sues you for getting injured. The most important aspect to realize is that if you take responsibility for people and their belongings, you are likely in a position where you could be sued. If that is the case, it would be a good idea to understand who your customers are. Where they are from, and how easy it would be for them to sue you. Most countries where this is an issue you can also get insurance for this type of issue and so I would suggest that if you have any concern you should strongly consider taking out a policy against lawsuits.

    Oh and as a last point, trading in any exposed business as a sole trader or sole proprietor is a reeeeally bad idea. If you get sued they can take your house.. However if you have a limited liability company of sorts at least there is some protection for your personal wellfare.

    I hope this helps. Feel free to ask if you have any more questions


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