Bit of an unusual one for me - I recently decided to get out of contracting and return to full-time employment. After several months of looking I have an offer (and possibly a second one around the corner) for a California-based company. It's a good offer, a high 6-figure $ salary plus share options.
The problem is, currently, they only hire non-US "employees" as "contractors", frequently through some kind of incorporated business. This puts me in a slightly tricky position. I've spent some time looking into the various options, searched on here and I've also spoken to their hiring manager about this. After making a big decision to stop being a freelancer/contractor it feels a bit odd to be contemplating taking on what is effectively another contract. I don't want a contract, I want to be able to publicly say "I've just joined XXX" as an employee etc.
So what exactly is the problem? Well, IR35 I guess. As far as I can tell, these are the potential options:
* Engage as a contractor through my existing Ltd. It's hard to see how it wouldn't be caught by IR35 - I haven't seen any contract yet but even if the contract could be twisted to be IR35 friendly I'm struggling to think how the working practices would put me outside. It's employment in all but name. If I operate IR35 then I'm going to take a big hit on the employer's NI. I could try and contrive a way to make it outside IR35 and hope I don't get investigated but I'd probably need to be very careful about how I present the role publicly which feels like I'd just be continuing as a contractor, which isn't what I wanted. Accountant has also advise that share options would make things very complicated too.
* Engage as a contractor on a self-employed basis. Potentially a simple solution and more tax-efficient than operating IR35 as I wouldn't need to worry about employer NIC. However it presents a new problem: I have a decent chunk of retained profits in MyCo and would ideally want to MVL and get that money out as capital. Engaging my new "employer" on a self-employed basis brings the TAAR into play - I'll almost certainly meet condition C and would have to rely on condition D and proving that gaining a tax advantage wasn't the main motivation for liquidating the company.
* Try and convince the company to give me a proper employment contract and arrange to pay my own taxes under HMRC's DPNI direct PAYE scheme. I feel like this is going to be a hard sell. It's quite obscure, there's very little information about it, they probably aren't going to want to arrange anything too custom just for me. They will probably still need me to submit "invoices" through the billing platform they use like everyone else. On the other hand, I don't mind the burden of running the payroll, there's no employer NIC liability and I think it allows me to MVL my Ltd without getting caught by the TAAR.
Are there any other options I've not considered? What approach should I be looking at? Its frustrating because its a good offer, for a really cool company, but one of the motivations for returning to perm employment is that I felt it was the best route for me to progress my career for more senior roles like principal engineer up to CTO in time. It feels like it would be hard to focus on these aspects of the role whilst remaining outside IR35 which in my mind rules out the Ltd company option, although apparently almost all of their non-US employees take this route.
The DPNI route seems like the best possible option but I strongly suspect they won't go for it.
What are the odds of being able to go down the self-employment route, whilst being able to MVL and avoid being investigated and caught by the TAAR and being hit with a massive income tax bill?
The problem is, currently, they only hire non-US "employees" as "contractors", frequently through some kind of incorporated business. This puts me in a slightly tricky position. I've spent some time looking into the various options, searched on here and I've also spoken to their hiring manager about this. After making a big decision to stop being a freelancer/contractor it feels a bit odd to be contemplating taking on what is effectively another contract. I don't want a contract, I want to be able to publicly say "I've just joined XXX" as an employee etc.
So what exactly is the problem? Well, IR35 I guess. As far as I can tell, these are the potential options:
* Engage as a contractor through my existing Ltd. It's hard to see how it wouldn't be caught by IR35 - I haven't seen any contract yet but even if the contract could be twisted to be IR35 friendly I'm struggling to think how the working practices would put me outside. It's employment in all but name. If I operate IR35 then I'm going to take a big hit on the employer's NI. I could try and contrive a way to make it outside IR35 and hope I don't get investigated but I'd probably need to be very careful about how I present the role publicly which feels like I'd just be continuing as a contractor, which isn't what I wanted. Accountant has also advise that share options would make things very complicated too.
* Engage as a contractor on a self-employed basis. Potentially a simple solution and more tax-efficient than operating IR35 as I wouldn't need to worry about employer NIC. However it presents a new problem: I have a decent chunk of retained profits in MyCo and would ideally want to MVL and get that money out as capital. Engaging my new "employer" on a self-employed basis brings the TAAR into play - I'll almost certainly meet condition C and would have to rely on condition D and proving that gaining a tax advantage wasn't the main motivation for liquidating the company.
* Try and convince the company to give me a proper employment contract and arrange to pay my own taxes under HMRC's DPNI direct PAYE scheme. I feel like this is going to be a hard sell. It's quite obscure, there's very little information about it, they probably aren't going to want to arrange anything too custom just for me. They will probably still need me to submit "invoices" through the billing platform they use like everyone else. On the other hand, I don't mind the burden of running the payroll, there's no employer NIC liability and I think it allows me to MVL my Ltd without getting caught by the TAAR.
Are there any other options I've not considered? What approach should I be looking at? Its frustrating because its a good offer, for a really cool company, but one of the motivations for returning to perm employment is that I felt it was the best route for me to progress my career for more senior roles like principal engineer up to CTO in time. It feels like it would be hard to focus on these aspects of the role whilst remaining outside IR35 which in my mind rules out the Ltd company option, although apparently almost all of their non-US employees take this route.
The DPNI route seems like the best possible option but I strongly suspect they won't go for it.
What are the odds of being able to go down the self-employment route, whilst being able to MVL and avoid being investigated and caught by the TAAR and being hit with a massive income tax bill?
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