IR35 - Switching Tax Residency Overseas But Staying With UK Client

[DaaaaaaaaaaN]

I have been contracting with my client for over two years now and my current contract is up at the end of Feb. My plan after this is to move overseas and contract abroad, however my client has recently mentioned that they would be interested in hiring me through through my foreign limited company and working remotely which may be outside IR35 given non-UK tax residents are not subject to IR35 regulations.

What would be the risks involved in my switching my tax residency abroad and contracting for the same client from a foreign country (I would be living abroad and working remotely)? Would the HMRC come down with an iron fist?

[WordIsBond]

Would the HMRC come down with an iron fist?

Absolutely, they would. Their problem is that their reach doesn't extend overseas, so their iron fist would splash into the water and do nothing but get their sleeve wet.

If you are not UK tax resident, and you are contracting directly with the client via a foreign company, HMRC has no authority and IR35 would not apply.

Whether you can get your tax residency changed that quickly might be another question.

[NotAllThere]

If you leave and all indications are you plan to leave permanently (i.e. not return within 5 years), you'll be considered non-tax resident immediately. While it's possible to do this and, e.g. rent out your house rather than selling it, the more ties you have, the more the risk of being labelled tax resident in the UK as well.

As soon as you are considered not tax resident in the UK, IR35 does not apply, and cannot apply.

I've worked remotely for UK companies (with occasional on-site visits) several times. Even invoicing through an agency. HMRC have received not one penny from me in tax for those engagements. As I am outside the EU, there was no VAT to worry about either.

[Eirikur]

You will have to pay taxes in the country where you are resident, which in some cases is a lot higher then UK tax.

[skysies]

If you are not UK tax resident, and you are contracting directly with the client via a foreign company, HMRC has no authority and IR35 would not apply.

I'm not sure about that. I was told by my accountant that if I become non-tax resident and continue working for my client in the UK, IR35 would still apply if I work for ONE client only.

[GigiBronz]

Move to Romania(part of EEA, no VAT), corp tax is 2-3%, cost of life is 1/3 of here. Weather is nice with hot summers, snow in winters.
Mountains and seaside at 2h distance. Infrastructure is a bit poor and people are a bit difficult sometimes.
Stick to a good accountant.
As long as you can avoid the popular places and you have the dosh. It can be pretty nice.
I am young and still strangely attached to S/SE. But will see where life takes me.

[BlasterBates]

I'm not sure about that. I was told by my accountant that if I become non-tax resident and continue working for my client in the UK, IR35 would still apply if I work for ONE client only.

If you're working remote in a foreign country, then you are not liable for National Insurance in the UK and IR35 does not apply. You may however be liable for pension and employment insurance in the country you work in.

It does apply if you travel back to the UK to work for your client one day a week.

[skysies]

It does apply if you travel back to the UK to work for your client one day a week.

Ok, do you have any reference to this rule? My accountant told me that I can't escape IR35, even if I become non-resident. However, PAYE won't apply in case I work as non-resident for more than 1 client.

[BlasterBates]

Ok, do you have any reference to this rule? My accountant told me that I can't escape IR35, even if I become non-resident. However, PAYE won't apply in case I work as non-resident for more than 1 client.

Are you working in the UK or remote?

You are only liable for tax on UK income. If you work remotely it isn't UK income. If you travel to the UK and work in an office it is.

If you're only in the UK one day a week, then you are non-resident but liable for tax. If you are not in the UK your business is based where ever you work and you have no UK tax liability. You are simply exporting your service.

If you simply asked your accountant whether you are liable for tax even if you are non-resident he will tell you, you are.

[skysies]

Are you working in the UK or remote?

Working 3 days in the UK office, the rest 2 days outside of the UK.

How is that different from what you mentioned, i.e working 1 day per week in the UK?