Help please with IR35 Scope Help please with IR35 Scope
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  1. #1

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    Default Help please with IR35 Scope

    Hi,

    I'm trying to get clarification on the scope of IR35 and have really struggled to get a clear view.

    My situation is that I'm British but live in the Netherlands. Current contract structure is:-

    My UK PSC -> UK Agent -> UK End Client

    I pay my salary from my UK company and calculate/deduct/remit Dutch taxes as I'm tax resident in the NL. I have an NT tax code issued by HMRC.

    The reality is that I provide services the majority of the time from the Netherlands.

    I'm trying to determine if my contract is out-of-scope or whether I could get an out-of-scope ruling from HMRC.


    By default the agent, etc. are assuming that my contract is subject to an in/out review the same as everyone else because the contract is between UK companies, etc.

    If I'm ruled inside IR35 and the payer calculates PAYE there would be no resulting NI/Tax to pay given my NT tax code - therefore from HMRC's perspective it's mute but from my point of view it impacts me hugely because the full contract value would need to be paid as salary and have Dutch tax calculated on.

    The reality is that the Dutch benefit, HMRC don't benefit and I lose.

    So if I'm forced down this route there's nothing to pay HMRC but I have increased Dutch tax and I also lose being able to process revenue through my PSC and therefore cannot claim business expenses for my travel costs which are significant, etc.

    Any ideas? Is there anyway I could get an out-of-scope or similar type judgement otherwise almost certainly the end client will force me to move to an umbrella, etc. If I can prove IR35 doesn't apply then they will allow my PSC to continue to have an arrangement.

    Many thanks!

  2. #2

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    Where are you tax resident? And have you considered setting up a Dutch ltd?

    I have worked for UK companies, via an agency from Switzerland, with my Swiss ltd. IR35 is utterly irrelevant to me, since it's a UK resident issue. TBH, if you've no tax residency in the UK, IR35 is also irrelevant. It's a personal tax. Only applicable if you work, physically, in the UK.

    I am not an international tax lawyer.
    <-2 5m->

  3. #3

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    Surly your current setup is illegal under Dutch law?


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  4. #4

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    Hi,

    I'm being told that being non-resident doesn't simply make IR35 not applicable. If the payer refuses to remit to your company and calculates UK payroll taxes, etc. then by definition it's been applied. This is exactly what I'm trying to determine, can I get some confirmation of out-of-scope such that the end client/payer continue to remit to my UK PSC?

    The structure is compliant from a UK & NL perspective. Here's how it works, let's say monthly contract revenue is 10k and I've decided to pay myself a 7k salary.

    The 7k gross salary is processed through the Dutch payroll - this might result in 3k of NL tax and therefore a net of 4k.

    My UK company pays me the 4k net and pays the NL tax authorities (Belastingdienst) the 3k.

    My UK company accounts for the gross, the 7K has to be run through a UK payroll but the tax & Ni is 0 given my NT tax code. The 0 tax is reported to HMRC.

    I'm resident for tax in the NL.

    Creating a Dutch BV wouldn't necessarily help with UK contracts - most agencies refuse to have a contract with a foreign company (and there's many other potential issues, cost, double professional fees, interco-costs between the agency entities, etc. etc). Plus because the contract is still with a UK end client and UK agency I'm anyway being told that this would still lead to the contract being considered for IR35 potentially.

    Anyway, issue circles back to whether I can somehow claim to be out-of-scope or whether this is possible to obtain from HMRC to avoid the agent and end client processing me inside of IR35.

    Cheers

  5. #5

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    Hi

    Any views please on whether IR35 would apply? And if not what’s the process on obtaining some form of exemption so the agency/client don’t treat me inside and force me to use an umbrella, etc.

  6. #6

    Default Help please with IR35 Scope

    All of your money should be processed via Dutch payrol company, the bit you process via your U.K. limited company for expenses is tax evasion but that’s your future issue when Dutch tax find out (make HMRC seem like girl guilds) - yes yes your agent told you this was legal etc etc it’s not


    Anyhoo the client won’t care where you are based and more than likely blanket you inside IR35 with everyone else (they after all are paying your U.K. limited company) hence uk umbrella

    Then how on earth are you going to pay Dutch tax ?



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    Last edited by GhostofTarbera; 24th January 2020 at 07:26.

  7. #7

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    Quote Originally Posted by GhostofTarbera View Post
    All of your money should be processed via Dutch payrol company, the bit you process via your U.K. limited company for expenses is tax evasion but that’s your future issue when Dutch tax find out (make HMRC seem like girl guilds) - yes yes your agent told you this was legal etc etc it’s not


    Anyhoo the client won’t care where you are based and more than likely blanket you inside IR35 with everyone else (they after all are paying your U.K. limited company) hence uk umbrella

    Then how on earth are you going to pay Dutch tax ?



    Sent from my iPhone using Contractor UK Forum

    Hey, thanks for the response.

    Yes, the client/agent will definitely blanket me inside hence I'm trying to establish if there's any process or way to be deemed out-of-scope for IR35 given I'm tax resident in the NL and am providing the service mainly from the NL.

    Is there a way for me to do this? It seems crazy that I would be forced to be processed inside when the HMRC will not benefit and it leads to massive additional administration, etc.


    Re the current structure. In reality I'm pretty much paying the whole contract value as salary in the Netherlands. I appreciate there could be questions re establishment and corporation tax but if the UK company makes no profit and everything is covered by PAYE in the NL then likely they're not going to be concerned.

    I don't see how expenses being paid out of the UK are tax evasion. It's perfectly acceptable for a UK company to employee a foreign national surely. It's not that material amount and given the contract value is paid as salary the expense is being met (practically) for the expenses from retained earnings.

  8. #8

    Default Help please with IR35 Scope

    Quote Originally Posted by nicke1 View Post
    Hey, thanks for the response.

    Yes, the client/agent will definitely blanket me inside hence I'm trying to establish if there's any process or way to be deemed out-of-scope for IR35 given I'm tax resident in the NL and am providing the service mainly from the NL.

    Is there a way for me to do this? It seems crazy that I would be forced to be processed inside when the HMRC will not benefit and it leads to massive additional administration, etc.


    Re the current structure. In reality I'm pretty much paying the whole contract value as salary in the Netherlands. I appreciate there could be questions re establishment and corporation tax but if the UK company makes no profit and everything is covered by PAYE in the NL then likely they're not going to be concerned.

    I don't see how expenses being paid out of the UK are tax evasion. It's perfectly acceptable for a UK company to employee a foreign national surely. It's not that material amount and given the contract value is paid as salary the expense is being met (practically) for the expenses from retained earnings.
    Starter for 10


    How not to use your UK Ltd in the Netherlands

    If your U.K. does not care where you work - live in Dubai and pay no tax


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    Last edited by GhostofTarbera; 24th January 2020 at 10:35.

  9. #9

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    Quote Originally Posted by GhostofTarbera View Post
    Starter for 10


    How not to use your UK Ltd in the Netherlands

    If your U.K. does not care where you work - live in Dubai and pay no tax


    Sent from my iPhone using Contractor UK Forum

    That's exactly my point re establishment. I've already discussed with both the Belastingdiesnt and my NL tax advisors. To be structure will include Dutch BV and inter-co between my Dutch BV and UK LTD where the UK LTD has to own the contract relationship.

    Re the IR35 question:-


    ------------

    the client/agent will definitely blanket me inside hence I'm trying to establish if there's any process or way to be deemed out-of-scope for IR35 given I'm tax resident in the NL and am providing the service mainly from the NL.

    Is there a way for me to do this? It seems crazy that I would be forced to be processed inside when the HMRC will not benefit and it leads to massive additional administration, etc.

    ------------


    Thanks

  10. #10

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    Sorry to chase - anyone have any idea if there's anyway my situation could be deemed out-of-scope? I would need to substantiate presumably as well so assume it would need to be something written in statue or confirmed by HMRC.

    It just seems insane that a UK company could employ for example a French worker who provides services from France to a UK client and the full revenue from that engagement is considered for IR35 (and by many organisations auto ruled inside or would refuse to even have a contract with the UK PSC).

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