Contractors' Questions: Do offshore rules stop agencies engaging me?

Contractor’s Question: I’m an Isle of Man resident (and IoM tax resident) and contractor with my own IoM PSC. I'm trying to contract with a UK end-client through a chain of a couple of agencies. The agencies say they won't engage with an offshore company because of the Offshore Employment Intermediaries rules

But the rules are designed to catch UK tax avoidance, and I'm not a UK tax resident nor do I intend to become one. Are they right, does engaging me as an offshore PSC cause them issues, despite the fact that there will be no UK tax or NI liability?

Expert’s Answer: The issue that the agencies have is perhaps two-fold. A non-UK resident is probably not caught by the Offshore Intermediary rules.

However it looks likely that the work is to be performed in the UK and as such you -- the worker -- may well be UK resident. The chances are that work performed full-time in the UK for a UK client but billed from a non-UK company would, if interpreted widely, capture this situation and the agencies are being cautious.

Secondly, although the company may be non-UK resident, is it establishing a UK permanent establishment by its sole shareholder/director working full time in the UK? Probably not but again it may be a very cautious approach.

Given that the new iteration of IR35, applicable to jobs in the public sector from April 6th 2017, agencies and end-clients could find themselves liable if the employee/contractor decision is incorrect. This is making a lot of agencies very nervous.

The expert was Graham Webber, director of tax enquiry specialists WTT Consulting.

Friday 24th March 2017