Residence and IR35

[hugebrain]

Hi,

Does IR35 apply If the contractor is not resident, ordinarily resident or domiciled in the United Kingdom?

At the IR website it says "If you are resident and ordinarily resident in the UK for tax purposes, then the deemed payment will be taxable in the UK, regardless of where the duties are carried out. If you are resident but not ordinarily resident you are taxable in the UK on all emoluments (deemed payments) arising from duties performed in the UK and on remittances to the UK of payments arising in respect of overseas duties."

www.inlandrevenue.gov.uk/...ign_q4.htm

But it does not say what happens if you are not resident at all (you can remain in England for less than 183 days and not become resident).

Can anyone point me to a definitive answer to this. I have looked at various accounting/legal sites and they offer conflicting opinions.

Hugebrain.

[antell]

Residence and IR35

The rules are different for NIC IR35 and for income tax IR35. As regards income tax the short answer is that if the duties are performed in the UK then the worker is liable to UK income tax (including income tax IR35) even if both the worker and employer are not resident, not ordinarily resident and not domiciled in the UK.

John Antell

www.john.antell.name

[hugebrain]

non-residence

Thanks for your reply.

What does that mean in practice? Does the company have to pay out 95% of the income as a salary, or can the company (registered in the UK) keep some of the profits and somehow offset corporation tax and the personal tax of the contractor?

If the company pays 95% of turnover as salary, does the contractor just pay the 25% (approx) personal tax and neither type of National Insurance?

Turnover would be around 48K.

[antell]

Non-residence

Hi Hugebrain,

In your "supplementary" question you have moved on from a general question to one which is specific to your circumstances. Unfortunately I can't answer that question on this board for two reasons:

Firstly more information would be needed before a specific answer could be given.

Secondly as a barrister I am only allowed to give advice on individual circumstances if I am instructed by a solicitor or by a member of another professional body recognised for this purpose by the Bar Council (in this field most of my clients are members of the Institution of Electrical Engineers who admit to membership anyone professionally engaged in IT).

I would be happy to advise you privately if you are or become a member of the IEE. I'm sorry that I can't take this discussion further on-line.

John Antell

www.john.antell.name

[zeitghost]

Re: Non-residence

Gosh, an advantage to being a member of the IEE.

What a novelty.

You could knock me down with a feather.

[antell]

IEE

The IEE have become much more "user friendly" in recent times. They actively encourage all IT professionals (not just hardware people) and they no longer have rigid requirements as to academic qualifications. Essentially anyone actually professionally engaged in IT can join online whatever their background.

John Antell

www.john.antell.name

[zeitghost]

Re: IEE

And they're cheaper than the BCS apparently.

I'm now MIEE for what that's worth.

Which isn't much, so far as I can tell.

[hugebrain]

Any Accountants Here

Thanks for your help John.

Since the legal guys aren't allowed to comment - perhaps an accountant would care to point me in the right direction?

Does anyone know how to deal with IR35 as a non-resident? My accountant and specialist IR35 advisors don't seem to be particularly clued up about this.

[planetit]

Re: Any Accountants Here

perhaps an accountant would care to point me in the right direction?

Sorry, ContractorUK kicked off all the proper accountants a few weeks back. They used to come here and provide useful advice for free in exchange for a link to their companies at the bottom of the reply. That was deemed unacceptable, so you don’t see many of them around these days. Of course it was counter productive. The legitimate accountants left, but there are still a few amateurs trying to pass themselves off as accountants.

[www 1staccountancy biz]

Re: Any Accountants Here

We weren't kicked off.....just told to calm down advertising.

As advised above, generally speaking if the income is derived in the UK and through a UK registered company then it's taxed here....and as such IR35 applies.

The fact that you are not ordinarily resident wouldn't apply as the company is permanently resident due to it's nature.

Are you sure that you're contract falls within IR35 legislation?