Contracting to a US software vendor providing services to client(s) in the UK

[StagsHead]

I've always been contracting through a UK based agency, so this is a new arrangement for me.
I will be working from home and from time to time at the offices of the client based in the UK.
Would this arrangement be outside the scope of IR35 as I will be contracting to a firm based outside of the UK?
The invoices will be charged at 0% VAT as the company is based in the US and outside the scope of VAT.
I’m currently a member of PCG and have https://www.pcg.org.uk/agency-failur...ault-insurance, in the event that the software vendor went bankrupt, as they are outside of the UK, then I will be out of pocket. Is there an additonal insurance that I can take out to cover this, is anybody aware of?

[Kanye]

The invoices will be charged at 0% VAT as the company is based in the US and outside the scope of VAT.

With you being UK based I assume VAT is still payable if your LTD earns over the 70k threshold.

Would this arrangement be outside the scope of IR35 as I will be contracting to a firm based outside of the UK?

The same. It obviously removes their IR35 responsibilities but I wouldn't have thought it diminished yours in any way.

[BlasterBates]

In my view IR35 does not apply to a foreign company. Whether you are an employee of a foreign company is subject to the laws of that country. However the fact that you will be working mainly in the UK means that in any case this would be legally impossible, therefore you must be self-employed.

I´m not aware of any precedence of someone being inside IR35 working for a foreign company, the hurdle of proving it would be immense given the fact that the client is outside the UK and that the indiviidual is working in their own office.

[Kanye]

In my view IR35 does not apply to a foreign company. Whether you are an employee of a foreign company is subject to the laws of that country. However the fact that you will be working mainly in the UK means that in any case this would be legally impossible, therefore you must be self-employed.

I´m not aware of any precedence of someone being inside IR35 working for a foreign company, the hurdle of proving it would be immense given the fact that the client is outside the UK and that the indiviidual is working in their own office.

It's obviously a massive grey area, but as you say, you are self employed and so therefore you have responsibilities under IR35 for demonstrating that you are operating independently and without undue direction and control etc.

That said, agreed it would be very difficult for them to pursue.

[TheFaQQer]

Would this arrangement be outside the scope of IR35 as I will be contracting to a firm based outside of the UK?

I don't see why the country of incorporation of the client matters one way or the other. You are still engaged as a UK-based contractor, who may be deemed to be a disguised employee of the client. You still have the same IR35 risks, and possibly even more - an American company may be more likely to refer to you as an employee if HMRC ask them anything.

The invoices will be charged at 0% VAT as the company is based in the US and outside the scope of VAT.

Be very careful about this and talk to your accountant. IIRC, it's about where the services are supplied which is the important thing. So, if you are producing something physical, then that is where the goods are received, so would be exempt. If it's a service which you are performing in the UK then I think you would still have to charge VAT. Ask your accountant, though, or check HMRC website.

I’m currently a member of PCG and have https://www.pcg.org.uk/agency-failur...ault-insurance, in the event that the software vendor went bankrupt, as they are outside of the UK, then I will be out of pocket.

You aren't going through an agency, so it doesn't apply - regardless of the territorial limits.

Is there an additonal insurance that I can take out to cover this, is anybody aware of?

Have the invoices factored and they take the risk (for a fee) and pay you quicker.

[TheFaQQer]

Be very careful about this and talk to your accountant. IIRC, it's about where the services are supplied which is the important thing. So, if you are producing something physical, then that is where the goods are received, so would be exempt. If it's a service which you are performing in the UK then I think you would still have to charge VAT. Ask your accountant, though, or check HMRC website.

I think I've got that the wrong way round - trying to read the HMRC website is more than a little confusing, though

The B2B general rule says "If you supply B2B services, other than those covered by the special rules described in the other sections of this notice, the place of supply of your services is the place where your customer belongs for the purposes of receiving your supply"

but there are different rules for electronically delivered services....

Section 17.8 of the HMRC guidelines says that if your "B2B supply is to a customer belonging outside the EC," you are "required to account for UK VAT to the extent that your customer uses and enjoys your services in the UK."