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Overseas and IR35

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    Overseas and IR35

    Hi everyone,

    After reading many posts here and elsewhere on the Internet I have come to the conclusion that there still persists confusion in regard to scenarios where one or more of the entities of a contracting relationship (contractor, PSC, client) is based abroad.

    We know that in all four scenarios where the Contractor is based in the UK, that IR35 should apply:

    1) UK-based: Contractor, PSC, Client --- EU-based: None --- IR35 applies: Yes
    2) UK-based: Contractor, PSC --- EU-based: Client --- IR35 applies: Yes
    3) UK-based: Contractor, Client --- EU-based: PSC --- IR35 applies: Yes
    4) UK-based: Contractor --- EU-based: PSC, Client --- IR35 applies: Yes

    But, what about scenarios where the Client and/or the PSC is UK-based, but the contractor is not (deemed non-UK resident for tax purposes, and performs the work 100% remotely from their EU residence)?:

    5) UK-based: Client --- EU-based: Contractor, PSC --- IR35 applies: ? (logically it does not?)
    6) UK-based: Client, PSC --- EU-based: Contractor --- IR35 applies: ? (potentially?)
    7) UK-based: PSC --- EU-based: Contractor, Client --- IR35 applies: ? (probably strange scenario)

    What would be your opinion about IR35 having a role in scenarios 5, 6, or 7?

    My situation is Scenario 5 (am resident in Latvia, contracting via a Latvian PSC, for a UK-based Client).

    Also, what do people think is the role of the Agency in this equation, since the Agency is UK-based? So, aside from the Client being UK-based, there is also the agency?

    Any opinions are welcome!

    #2
    That is unintelligible.

    Try using a table / spreadsheet instead.
    I was an IPSE Consultative Council Member, until the BoD abolished it. I am not an IPSE Member, since they have no longer have any relevance to me, as an IT Contractor. Read my lips...I recommend QDOS for ALL your Insurance requirements (Contact me for a referral code).

    Comment


      #3
      Originally posted by Scruff View Post
      That is unintelligible.

      Try using a table / spreadsheet instead.
      Quite clear to me.

      Option 5 - where you work remotely via your Latvian company for a UK client should not be affected by IR35, which is about UK tax liability. Working via an agency makes no difference. But that's the law - what clients and agents choose to do may not be rational, as they can be very risk averse.
      Down with racism. Long live miscegenation!

      Comment


        #4
        Originally posted by NotAllThere View Post
        Quite clear to me.

        Option 5 - where you work remotely via your Latvian company for a UK client should not be affected by IR35, which is about UK tax liability. Working via an agency makes no difference. But that's the law - what clients and agents choose to do may not be rational, as they can be very risk averse.
        Many thanks for your response.

        Comment


          #5
          Originally posted by NotAllThere View Post
          Quite clear to me.

          Option 5 - where you work remotely via your Latvian company for a UK client should not be affected by IR35, which is about UK tax liability. Working via an agency makes no difference. But that's the law - what clients and agents choose to do may not be rational, as they can be very risk averse.
          Indeed.

          Many agencies will not pay a non UK company. It's one reason why a load of the tax evasion schemes used a UK LTD for the initial payment before offshoring it to the trust that then "loaned" it.
          So in principal it's fine and a clear cut case of IR35 not being even slightly relevant, but practically difficult to use. Easier to use if direct to the client.
          See You Next Tuesday

          Comment


            #6
            Originally posted by Lance View Post
            Indeed.

            "Many agencies will not pay a non UK company. It's one reason why a load of the tax evasion schemes used a UK LTD for the initial payment before offshoring it to the trust that then "loaned" it."
            Many thanks for your response.

            I understand what you say about the agencies not being very open to making payments abroad. However, as I am genuinely living abroad (with <16 days a year visiting the UK, mostly during Christmas holidays), married with a Latvian national and with a house in Latvia, it should be quite far-fetched to be dubious, right? This is probably why the agency was very open to paying the full amount to my Latvian-based PSC.
            Last edited by NotAllThere; 5 December 2019, 10:38. Reason: Fixed quoting

            Comment


              #7
              Originally posted by deepblueuk View Post
              Many thanks for your response.

              I understand what you say about the agencies not being very open to making payments abroad. However, as I am genuinely living abroad (with <16 days a year visiting the UK, mostly during Christmas holidays), married with a Latvian national and with a house in Latvia, it should be quite far-fetched to be dubious, right? This is probably why the agency was very open to paying the full amount to my Latvian-based PSC.
              If you've found the job, and the agency are happy to pay then congratulations....

              Only got brexit to worry about now... You don't need to worry about freedom of movement though, just importation of services.
              See You Next Tuesday

              Comment


                #8
                Originally posted by NotAllThere View Post
                Quite clear to me.

                Option 5 - where you work remotely via your Latvian company for a UK client should not be affected by IR35, which is about UK tax liability. Working via an agency makes no difference. But that's the law - what clients and agents choose to do may not be rational, as they can be very risk averse.
                On TapaTalk it isn't (wasn't) - clearer now on Chrome
                I was an IPSE Consultative Council Member, until the BoD abolished it. I am not an IPSE Member, since they have no longer have any relevance to me, as an IT Contractor. Read my lips...I recommend QDOS for ALL your Insurance requirements (Contact me for a referral code).

                Comment


                  #9
                  Originally posted by deepblueuk View Post
                  Hi everyone,

                  After reading many posts here and elsewhere on the Internet I have come to the conclusion that there still persists confusion in regard to scenarios where one or more of the entities of a contracting relationship (contractor, PSC, client) is based abroad.

                  We know that in all four scenarios where the Contractor is based in the UK, that IR35 should apply:

                  1) UK-based: Contractor, PSC, Client --- EU-based: None --- IR35 applies: Yes
                  2) UK-based: Contractor, PSC --- EU-based: Client --- IR35 applies: Yes
                  3) UK-based: Contractor, Client --- EU-based: PSC --- IR35 applies: Yes
                  4) UK-based: Contractor --- EU-based: PSC, Client --- IR35 applies: Yes

                  But, what about scenarios where the Client and/or the PSC is UK-based, but the contractor is not (deemed non-UK resident for tax purposes, and performs the work 100% remotely from their EU residence)?:

                  5) UK-based: Client --- EU-based: Contractor, PSC --- IR35 applies: ? (logically it does not?)
                  6) UK-based: Client, PSC --- EU-based: Contractor --- IR35 applies: ? (potentially?)
                  7) UK-based: PSC --- EU-based: Contractor, Client --- IR35 applies: ? (probably strange scenario)

                  What would be your opinion about IR35 having a role in scenarios 5, 6, or 7?

                  My situation is Scenario 5 (am resident in Latvia, contracting via a Latvian PSC, for a UK-based Client).

                  Also, what do people think is the role of the Agency in this equation, since the Agency is UK-based? So, aside from the Client being UK-based, there is also the agency?

                  Any opinions are welcome!

                  I am also confused by the above table, but I think you are safe working abroad in Latvia according to the pending IR35 Off Payroll Working, you are definitely OUTSIDE IR35 from my understanding of the reading of Understanding off-payroll working (IR35) - GOV.UK and What is Inside and Outside IR35, IR35 - Qdos Contractor



                  What is the IR35 answer for an independent contractor with LTD and PSC based in the UK working with overseas clients?

                  The closest trustworth reliable advice I found was QDOS consulting IR35: What to do with an overseas client?

                  It seems to suggest that the overseas client beyond the UK borders has to pay National Insurance and is determines the Off Payroll Working status. On closer inspection, if the overseas client has a definite UK presence and offices here then Off Payroll Working would apply. In other words, big banks are excluded.

                  In your scenarios above, if the client was based in EU (say Latvia), but did not have a UK presence, office of work, then surely IR35 does not apply. I think the supply chain is the issue, most of the time, being the recruitment ageny is based in the UK. The one way it would work was if the recruitment agency just took a "finder's fee" / "matchmaker's fee" and removed themselves for the payment supply chain. Obviously, direct B2C relationships are just easy, but finding them .....

                  I was thinking for late 2020 / early 2021 if I could find small foreign businesses (turnover less than £10M) and then use a statement of work (SOW) then I could go back to OUTSIDE IR35 contracting. Thoughts?

                  Comment


                    #10
                    The above is mostly nonsense or based on draft legislation that will be amended shortly. The recently concluded review promises to apply the small companies provisions to a fully overseas supply chain, i.e. the PSC will remain responsible and liable. However, if there is a UK presence above the PSC, that entity is the Fee Payer.

                    Comment

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