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RFDesign
3rd December 2003, 14:12
Hi,

I've just started Contracting again following three years of 'secure' (ha!) permiehood. I am now considering taking a contract in Ireland (Republic of) for less than 6 months.

I read in IR publication 490 that 'special rules' apply to travel and accommodation expenses whilst working abroad, and that they appear to be wholly-deductible expenses for tax purposes.

However, I notice that accommodation is actually called 'board and lodgings'. If I decide to rent rather than go B&Bing, will the rental also be a deductible expense? Does it matter if it's within IR35 or not?

Cheers.

ASB
3rd December 2003, 15:24
What makes you think IR35 could apply?

FA2000/12 says ".....would be regarded for income tax purposes as an employee of the client".

I don't see how they can realistically apply UK case law to deem somebody an employee of a Foreign company.

I don't see how they could extend their logic to deem you an employee of the UK office (if any exists) of said company.

I would be interested in the reasoning that could be put forward to apply IR35 to Foreign arrangements because I can't see it, I may simply be blind to it though.

zeitghost
3rd December 2003, 15:26
What, RF design is picking up?

Now where did I leave the "RF Design for Dummies" book?

Are you still using 6V6s and EF80s?

Bradley
3rd December 2003, 16:29
I don't see how they can realistically apply UK case law to deem somebody an employee of a Foreign company
www.inlandrevenue.gov.uk/...ign_q4.htm (http://www.inlandrevenue.gov.uk/ir35/faq_qanda/foreign_q4.htm)

ASB
3rd December 2003, 17:17
All that says (to paraphrase) is "if we deem you an employee you will still have to pay the deemed payment because it is asessed under schedule E". It presupposes you are caught - it does not deal with ascetaining whether section 12 applies.

Now, assume a bog standard UK resident is actually employed by a French co. They will be paying tax in France, tax in the UK - and getting the French tax offset due to the double taxation agreement. They will be paying NI in either France or UK by election but limited to 5(?) years after which they would have to pay France. Their employment - whilst in France at least - will be covered by French law.

Now, consider me. One of my customers is French and I do a certain amount fo work for them. There is no UK intermediary involved other than MyCo. I will discount any possibility of trying to claim MyCo as an intermediary.

So, all they can do is construct the hypothetical contract betrween me and the French client. What legal framework can they try and apply to say "it would have been employment". Employment under what?

Not only do they have to assume a contract, they then have to assume a jurisdiction. This gets into a real fantasy, "well first we'll assume that your client is in the UK, then we know we can apply UK law" - but this is diametrically opposed to the actual facts. Facts which are relevant in the construction of the hypothetical contract.

As an alternative they could try and deem me an employee under French law - but they are not empowered to do that. A French court would be unable to declare "well he would have been were it not for" - it is not a construct they have.

I personally would like to see a test case involving international issues. I think it opens up a real can of worms. I don't want to be that test case though (although I think I am safe for other reasons anyway).

Also, since the NI portions of the regulations contains slightly different definitions that would be another minefield.

Simon.

Bradley
3rd December 2003, 17:44
ASB - are you saying that you can't get touched by IR35 because an employment contract couldn't exist in reality that covered the particular situation you're in?

If so, then that will not get you out of IR35.

It does not matter that there cannot be an actual contract, all that matters is that the work you do for a client exhibits the characteristics of an employment. There really isn't any ambiguity.

RFDesign
3rd December 2003, 18:56
Hmmm!

The client company is actually American, but also has offices in Ireland (where the work is), and the UK. I had the intention of working through MyCo Ltd (UK registered), and am 'resident', 'ordinarily resident' and 'domiciled' in the UK. Frankly, I don't mind working within IR35 (I like to sleep at night!).

As I understand it, I wouldn't be liable to Irish tax for such a short contract.

Maybe I just shouldn't bother...............:D

ASB
3rd December 2003, 19:03
No, I am not saying that. Just that I believe (possibly completely misguidedly) that construction of the hypothetical contract where there is more than one country - and no uk intermediary - is going to be pose problems.

Even if an employment contract could not exist the tax provisions could apply - however I expect the NI provisions would be much more difficult to apply. This specifies employed earner's employment.

And no, this is no part of my IR35 defence.

Simon.

Bradley
4th December 2003, 00:17
No, I am not saying that. Just that I believe (possibly completely misguidedly) that construction of the hypothetical contract where there is more than one country - and no uk intermediary - is going to be pose problems.
There has to be an intermediary, otherwise IR35 can't apply at all

R Soles
4th December 2003, 09:10
If it's where I think it is.

Pop along to cubicle b21e101 and say hello.

RS
;)

ASB
4th December 2003, 09:41
Sorry, No additional UK intermediary beyond MyCo

Bradley
4th December 2003, 09:47
MyCo is enough