Hiring a virtual assistant based overseas — payroll, VAT and employment status?

Question

Hiring a virtual assistant based overseas — payroll, VAT and employment status?

answered

11 views

My consultancy is growing, and I am thinking about hiring a virtual assistant based overseas to help with inbox management, diary bookings, and chasing invoices. The work would be part-time, around 15 hours a week, and done remotely from the assistant's home country. I want to do this properly, but I am not sure where to start.

First, how do I decide whether this person would be an employee or a self-employed contractor? They would work mainly for me, use my systems, and follow my instructions, which makes me worry that calling them a contractor on paper might not be enough. If they are treated as an employee in the UK, or in their own country, what obligations would that create for my limited company?

Second, what about UK payroll? If they live and work entirely overseas and are not UK tax resident, do I still need to run them through UK PAYE, or is payment simply a business expense supported by an invoice? I have also heard about employer of record services, and I wonder whether that is overkill for one part-time assistant or a sensible way to handle local tax and employment law.

Third, does VAT come into this at all? If the assistant is self-employed and invoices me from outside the UK, do I need to think about reverse-charge VAT, or does that only apply to larger business services? I am VAT registered, so I want to make sure I record the payments correctly.

Finally, what practical paperwork should I have in place before we start, such as a contract, data protection terms, confidentiality, and a clear payment method in their currency? If you have hired someone overseas, what did you get wrong first time, and what would you do differently?

Tagsvat payroll overseas virtual assistant

Answer 1

DDasiy Smith

Start with employment status, because it drives tax, payroll and local legal duties, and the label in a contract is not decisive. Ask who controls the work, whether the assistant must do it personally, whether there is an ongoing obligation to offer and accept work, and how integrated they are in your business. Working mainly for you, for regular hours, on your systems and under your instructions points toward employment in substance, even at 15 hours a week. A genuinely independent contractor is more likely to work for several clients, set their own hours and methods, use their own equipment, and be able to send a substitute or decline work.

If the assistant is in reality an employee where they live, UK PAYE alone will not make you compliant. You may need to meet that country's employment, tax withholding and social security rules, which is why an employer of record can be proportionate even for one part-time role: it employs the person locally, runs local payroll and handles statutory entitlements, while you pay a service fee. Your own foreign payroll is usually disproportionate for 15 hours a week, but ignoring local law is not safe.

If they are genuinely self-employed, work wholly overseas and are not UK tax resident, you would not normally put them through UK PAYE. Pay them gross against a proper invoice and keep evidence that the work was done abroad, including the contract, invoices, payment records and any statement of their business status. Keep the invoice, exchange rate and business purpose clear.

VAT does come into it. As a VAT-registered UK business buying services from outside the UK, you generally apply the reverse charge: you account for UK VAT on the service as both output and, subject to your normal recovery rules, input VAT, so for a fully taxable consultancy the net effect is often nil. Do not simply add foreign VAT or ignore the transaction, and record the supplier, service, date, currency and reverse-charge treatment in your VAT records.

Before starting, agree a written contract covering scope, hours, rate and currency, payment dates, termination, confidentiality and intellectual property. Add data protection terms for inbox and diary work, limit system access, use separate logins, and agree how data is returned or deleted at the end. Review status after a few months if hours or control have grown.

Hiring a virtual assistant based overseas — payroll, VAT and employment status?

1 Answer

Your answer

Businesses/Freelancers

Are You An Accountant?

Who Are We?

Registered Companies