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If you're doing work for a foreign company it's best to pay an accountant to sort out the tax for you. I know people who work in UK for foreign companies usually set up and LTD company and then pay themselves through that, through dividends etc, effectively only paying about 20% tax on everything.

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As someone who contracts in the UK, I'd say it really depends on how much you're making and for what duration. If you're going to make £10,000 on a three month contract you're probably better off just registering for self assessment. I did this for a while when I was making around £28,000/annum because it was the most tax effective and easiest solution in my case. Also accountants are expensive.

If you're making £60,000+ you're probably going to want to set up an LTD company, but at that point you're really best off talking to an accountant and discussing your options.

I'm on about £28k per annum as a remote contractor -- I'd second this advice.

If you are a contractor, LTD saves you from unlimited liabilities.

What they are doing is probably tax evasion, unless they are only resident for a very short time or are running a business which is not a thin shell around an employment arrangement.

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