Canadian Government Work

[NickFitz]

I may shortly be getting some work from a department of the Canadian government, which from their point of view will be me acting as a freelance, but which I expect to do through my limited company. I'll be working from home in the UK and won't have to go over there at any point.

Yes, I will be asking my accountant, but I just wondered if anybody had any thoughts about stuff to watch out for, things I ought to do, whether doing the work through my ltd is in fact a bad idea, and suchlike useful advice.

TIA

Edited to add: no agency, BTW.

[jamesbrown]

Not much that you probably don’t know already. If the jurisdiction and governing law is a Canadian province, you’ll need to check/upgrade your PII for NA and pay close attention to the insurance requirements too - they can be batty sometimes. A good reason to use your company though. I’d never deal with a NA client on a self-employed basis.

Also look for the non-compete/non-solicitation clauses, which can be dangerously widely drawn in my experience (may just be a coincidence though).

There may be some weird stuff about relinquishing any interest in Canadian Tax Credits (if you’re doing any R&D), but you can ignore that.

Bottom line, normal due diligence, so get a commercial review as well as an IR35 review. Otherwise, there shouldn’t be any surprises.

[jamesbrown]

Will add that I have no experience of gov’t work in Canada, only corporations, so there may be some hoops there. I have some work for the US gov’t and there were a ton of hoops to jump through, initially, to become a foreign vendor, but it sounds like you’ve already been offered the work, so...

[NickFitz]

Thanks for that. I'll have to remember to check on the PII aspect - can't be too careful!

In fact, looking in more detail at what info I have, it's now clear that the arrangement will be with an individual, who in turn is funded by HMG Canada and therefore required to abide by Canadian government regulations - it's not quite an academic research project, but along similar lines.

So the government legal stuff will be for them to deal with, and terms and so forth will be negotiated between us as individuals, or them as an individual and my Ltd, which I suspect some on here would regard as a huge red flag and others (including me) would regard as much better than having to deal with FacelessOrg

[jamesbrown]

Thanks for that. I'll have to remember to check on the PII aspect - can't be too careful!

Yup.

In fact, looking in more detail at what info I have, it's now clear that the arrangement will be with an individual, who in turn is funded by HMG Canada and therefore required to abide by Canadian government regulations - it's not quite an academic research project, but along similar lines.

OK, that makes more sense. It's super-hard to get U.S. gov't funding as a foreign vendor for most U.S. gov't agencies, and I expect it's similar in Canada, but academic funding routes tend to be more open. Either way, it will probably save you some considerable headaches to have an intermediary in Canada (which is how I read your clarification). The prime contract is between this individual (or perhaps a university at which they work) and the gov't, and it's their responsibility to handle that and tell you what might be needed. That'll make things much easier for you.

which I suspect some on here would regard as a huge red flag and others (including me) would regard as much better than having to deal with FacelessOrg

The only reason I'd say this is a red flag (EDIT: I mean you contracting personally), or more of a yellow one, is the commercial aspect, so nothing to do w/ IR35, for example (indeed, completely irrelevant if you treat this as self-employed income). It's more about your personal exposure if something goes wrong. As you know, it's a super litigious society, plus the jurisdiction and governing law is probably not in the UK. You could try to argue for that (much preferred). Otherwise, just load up on PII with NA jurisdiction and correct governing law (FWIW, I haven't found anyone better than Hiscox via Randell Dorling with your IPSE+ membership, if you have that). If this is R&D work, the commercial risk is probably not that high though.

Again, just watch out for the non-compete clauses. I have a contract with a Canadian company at the moment that went through commercial review and it was pretty eye-opening for me. The non-compete was so broadly drawn that I would've been at risk of using my own pre-existing work/product in other contexts after the project, even on completely unrelated things for companies that were operating in vaguely the same area as the client.

[NickFitz]

OK, that makes more sense. It's super-hard to get U.S. gov't funding as a foreign vendor for most U.S. gov't agencies, and I expect it's similar in Canada, but academic funding routes tend to be more open. Either way, it will probably save you some considerable headaches to have an intermediary in Canada (which is how I read your clarification). The prime contract is between this individual (or perhaps a university at which they work) and the gov't, and it's their responsibility to handle that and tell you what might be needed. That'll make things much easier for you.

It's along those lines, and the contract is directly with the individual who has, in turn, been brought on by the government agency. So as long as Canada don't suddenly impose sanctions on the UK, and I don't magically turn into a former Canadian civil servant in receipt of a pension, there shouldn't be anything for me to worry about - the Canadians probably won't even know who I am, as that info isn't relevant to the way they're invoicing the Canadian government.

The only reason I'd say this is a red flag (EDIT: I mean you contracting personally), or more of a yellow one, is the commercial aspect, so nothing to do w/ IR35, for example (indeed, completely irrelevant if you treat this as self-employed income). It's more about your personal exposure if something goes wrong. As you know, it's a super litigious society, plus the jurisdiction and governing law is probably not in the UK. You could try to argue for that (much preferred). Otherwise, just load up on PII with NA jurisdiction and correct governing law (FWIW, I haven't found anyone better than Hiscox via Randell Dorling with your IPSE+ membership, if you have that). If this is R&D work, the commercial risk is probably not that high though.

Again, just watch out for the non-compete clauses. I have a contract with a Canadian company at the moment that went through commercial review and it was pretty eye-opening for me. The non-compete was so broadly drawn that I would've been at risk of using my own pre-existing work/product in other contexts after the project, even on completely unrelated things for companies that were operating in vaguely the same area as the client.

I won't be doing the work on a self-employed basis, but through MyCo, and the end product (parts of a draft document contributing to a proposed standard) isn't likely to harm anybody; anyway, it'll be the responsibility of the standards body that will ultimately own it if it ever gets that far

The agreement doesn't have any non-compete clauses, which I suppose is one of the advantages of contracting with somebody who is themselves a freelance consultant who doesn't like being messed around by such things

Thanks for all your help; it's much appreciated

[jamesbrown]

Cool, sounds like a great opportunity. Have fun with it!

[WordIsBond]

This doesn't sound like a situation that gives you significant liability exposure, but you'll have to make that assessment (or pay someone to do so). If there is significant liability and also you have significant reserves in your company, you might want to shelter them by using a new ltd for this contract. Under that scenario there would probably be little reason to register the new company for VAT.

Other than that I don't think there's anything I'd add to what JB has said.

edit: I never leave significant reserves in MyCo because I'm always dealing with foreign clients and I can't always insist on UK jurisdiction for the contract. But I do always try really hard to get the jurisdiction here, and will yield some on other provisions to accomplish that.