Determining IR35 Status - EU clients

[TheCyclingProgrammer]

But none of the main criteria apply to non-UK companies!!!!!!

How did you come to that conclusion?

[SuperLooper]

How did you come to that conclusion?

HMRC have no jurisdiction over foreign clients. To me it is blindingly obvious that no matter what HMRC may say, foreign clients are under no obligation whatsoever to do anything about it.

[jamesbrown]

HMRC have no jurisdiction over foreign clients. To me it is blindingly obvious that no matter what HMRC may say, foreign clients are under no obligation whatsoever to do anything about it.

It doesn't really matter whether something is blindingly obvious to you or not blindingly obvious to you.

Legislation can say all sorts of things. Quite often, it says stupid things.

The draft legislation is the best guide to the final legislation. The draft legislation is built on existing legislation, notably chapters 8 and 10 of part 2. The draft legislation is available. Read it, paying particular attention to the already enacted 61R(7) in 10(2), and then tell me where overseas companies have a special exemption.

[Jings]

Who the rules apply to
Some rules already apply to all public sector clients, but from 6 April 2020 medium and large-sized private sector clients also need to apply them. The private sector includes third sector organisations, such as some charities.

The rules apply to all public sector clients and private sector companies that meet 2 or more of the following conditions:

• you have an annual turnover of more than £10.2 million
• you have a balance sheet total of more than £5.1 million
• you have more than 50 employees
• This is in line with the small companies’ regime.

Simplified test
A simplified test also applies to some clients and considers annual turnover. You must apply the rules if you have an annual turnover of more than £10.2 million and are not:

• a company
• a limited liability partnership
• an unregistered company
• an overseas company

There are also rules which cover connected and associated companies. If the parent of a group is medium or large, their subsidiaries will also have to apply the off-payroll working rules.

The above is from the UK Government guidance for clients. It talks about companies and overseas companies. Therefore, when it says "companies" we can take that to mean UK companies. Just like when it says "public authorities" we can safely assume that the legislation applies to UK public authorities and does not extend to the Rio de Janeiro City Council.

The differentiation between "test" and "simplified test" is confusing, but I read it as confirming that the main test, and therefore the rules, does not apply if you are an overseas company.

I just don't see how it can be interpreted any other way.

[TheCyclingProgrammer]

That’s one mighty big assumption. There is nothing in the section you quoted that suggests that they are excluding overseas companies, sorry. It’s also unwise to rely entirely on HMRC guidance as it’s not unusual for it to not completely align with legislation.

[SuperLooper]

and then tell me where overseas companies have a special exemption.

It really doesn't make a blind bit of difference what HMRC write in their guidance. Overseas companies have an exemption by virtue of the simple fact that HMRC rules cannot possibly apply to them, as HMRC have no jurisdiction over them!

[Jings]

That’s one mighty big assumption. There is nothing in the section you quoted that suggests that they are excluding overseas companies, sorry. It’s also unwise to rely entirely on HMRC guidance as it’s not unusual for it to not completely align with legislation.

But there is. It expressly states "you must apply the rules if you are not an overseas company".

[TheCyclingProgrammer]

But there is. It expressly states "you must apply the rules if you are not an overseas company".

For the second time, that only relates to the simplified test.

[jamesbrown]

It really doesn't make a blind bit of difference what HMRC write in their guidance. Overseas companies have an exemption by virtue of the simple fact that HMRC rules cannot possibly apply to them, as HMRC have no jurisdiction over them!

Needs more italic.

Do you not think it’s rather important for the rest of the supply chain, including the UK PSC, to establish where the liability and responsibility lies? You are confusing these things with enforceability.

[jamesbrown]

But there is. It expressly states "you must apply the rules if you are not an overseas company".

What part of “read the legislation” don’t you understand? This scribble on an HMRC website is worthless and, as you can see, there isn’t even agreement about the worthless scribble. The draft legislation places responsibility and liability on overseas companies and introduces a concept of deemed UK residence. The draft might change, but it is literally the only source of accurate information.