• Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.
  • Want to receive the latest contracting news and advice straight to your inbox? Sign up to the ContractorUK newsletter here. Every sign up will also be entered into a draw to WIN £100 Amazon vouchers!

Trying to understand my IR35 status

Collapse
X
  •  
  • Filter
  • Time
  • Show
Clear All
new posts

    Trying to understand my IR35 status

    Dear all, I wonder if you could advise me. I am currently working for an American company which employs me through a subsidiary here in the UK. As I am the sole employee left in the UK, they are deciding to close this subsidiary and making my current role redundant.

    They still want to retain my service though so they want me to start contracting for them. They cannot directly emplloy me as they US payroll would not allow an employee with a domicile outside the US.
    1. Will I be deemed inside or outside IR35?
    2. Can I use with HMRC the argument of - subsidiary is closed, being a contractor is the only way to keep on working for this company, why should I be inside IR35?
    3. Is a lmt better than a sole trade?
    4. Can I go outside IR35 now and the inside from next year?

    Thank you so much for your help.

    #2
    You'll be inside IR35 unless the facts on the ground change substantially.

    You have a few options in terms of the mechanics:
    1. Contract inside IR35 (probably doesn't make sense)
    2. Register as self-employed and pay tax with your SATR each year
    3. Register a PAYE direct scheme (DPNI) with HMRC. This is basically a payroll for a foreign "employer", but you manage the payroll and it doesn't require that you are formally employed by your engager. Also, there is no employer NI.

    Tax-wise, your best option is probably (2), but (3) is a perfectly good option too. Be aware that the average HMRC call center person won't know anything about DPNI:

    National Insurance for people in the UK working where there is no employer in the UK

    Comment


      #3
      IR35 was set up to stop "Friday to Monday" i.e. people leaving and being reemployed as contractors for any reason, so the assumption will be that you're IN as the day to day role won't change on the Monday from the Friday (as it were)

      If you could demonstrate that it changed significantly, around Direction and Control, Mutuality of Obligation, Right of Substitution etc (and not just in contract) you might have a case to go outside but you'd be defending it on the back foot

      In terms of outside this year the inside the next, the only thing that changes next year is who makes the determination - currently it's you (and your liability) , next April it's the client (and their liability) . The rules about how the determination is formed stay the same.
      ⭐️ Gold Star Contractor

      Comment


        #4
        Originally posted by PerfectStorm View Post
        In terms of outside this year the inside the next, the only thing that changes next year is who makes the determination - currently it's you (and your liability) , next April it's the client (and their liability) . The rules about how the determination is formed stay the same.
        For an overseas entity with no UK presence, it would still be the OP’s company deciding (and carrying the liability) from next year too.

        Comment


          #5
          This is not the same as leaving a company and going back to it as the company will cease trading. There will be no audit where contractors working there will be checked. I would simply ensure your contract and working arrangement are outside IR35.
          I'm alright Jack

          Comment


            #6
            Move to a nice country with a low tax rate - job done


            Sent from my iPhone using Contractor UK Forum

            Comment


              #7
              Originally posted by BlasterBates View Post
              This is not the same as leaving a company and going back to it as the company will cease trading. There will be no audit where contractors working there will be checked. I would simply ensure your contract and working arrangement are outside IR35.
              Technically, this is accurate. Practically, they'll say nothing has changed, if he's ever investigated. Still doing the same work, essentially for the same people.

              As you said, there will be no audit. So the likelihood of an investigation starting from the client side is close to nil. The likelihood of it starting from his side is not nil.

              If he is investigated they will know who his former employer was. They may not know that it was a subsidiary of his current client. It would help if the name of the sub is different from the name of the parent company. If the names are the same I'd say there's still some risk here.

              But, if OP can make sure contract and working arrangements are outside, the fact that the UK sub won't exist anymore does make a much better story and the normal Friday/Monday thing.

              OP, see if they will work with you to the extent of using a contract under English law (or Scottish, if applicable). That will help a lot with PI insurance and also makes a good IR35 story. American companies don't sign English law contracts with their employees. They do sign English law contracts with English businesses.

              Comment


                #8
                Based on the facts you've presented in your opening statements, I'd deem you inside because of the Friday - Monday situation that you're in.

                Depends if you want to carry out a CEST tool assessment for yourself to confirm or not.
                The greatest trick the devil ever pulled was convincing the world that he didn't exist

                Comment


                  #9
                  Originally posted by LondonManc View Post
                  Based on the facts you've presented in your opening statements, I'd deem you inside because of the Friday - Monday situation that you're in.

                  Depends if you want to carry out a CEST tool assessment for yourself to confirm or not.
                  In fairness, the CEST tool would place a lone mercenary or Batman inside IR35 so I wouldn't give it too much confidence
                  ⭐️ Gold Star Contractor

                  Comment


                    #10
                    Originally posted by PerfectStorm View Post
                    In fairness, the CEST tool would place a lone mercenary or Batman inside IR35 so I wouldn't give it too much confidence
                    Maybe not but until it's been dismissed officially as ineffective.
                    The greatest trick the devil ever pulled was convincing the world that he didn't exist

                    Comment

                    Working...
                    X