Brexit in the covid age: what overseas contracting in the new normal might look like

As the spread of Coronavirus slowly but surely begins to ease, everyone is once again turning their attention to ‘business-as-normal’ concerns.

For UK contractors wanting to work overseas, much of this is focused on Brexit and the possible changes to the usual tax and compliance frameworks that could come into force after December 2020, writes Michelle Reilly, chief executive of 6CATS International.

Six contracting-related scenarios under Brexit

While at the time of writing there is still a lot left to be clarified (in fact there are no published finalised guidelines for any country), here are six scenarios which Brexit guidance to work temporarily abroad will likely refer to, and which contractors should beware:

  1. UK limited company contractors will not usually be able to use their UK company while operating abroad. In fact, we believe that it is very likely that the use of a UK limited company will not be recognised as a legitimate operating structure for work in EU countries
  2. The ongoing misinterpretation over the 183-day rule will continue to cause problems for UK limited company contractors. It’s crucial that contractors clarify their determination with an expert to prevent facing fines and potential legal action.
  3. A1 forms, which are already widely misused by UK contractors, will not be recognised by most EU countries. Indeed France, Germany and Belgium have already made it clear they will not recognise them after Brexit.
  4. UK ‘umbrella’ workers should not be working outside the UK, except for very short-term contracts. We expect this restriction to be tightened up further in the near future.
  5. Right to Work letters (RTW) have already been issued by all EU countries to those contracting in those locations who are already registered. We believe that those not registered will be required to apply for appropriate authorisation to work in each destination (this could be a visa, work permit or a form of RTW). The precise format is currently uncertain, however.
  6. While not directly related to Brexit, the need for a comprehensive private medical insurance policy will continue to be a very important requirement, post-Covid 19.

The impact of Covid on contracting in 2021

Obviously, it’s impossible to say with certainty what lies ahead for 2021, but our expectation is that as more UK agencies seek to exploit international markets, compliance will become a pre-requisite to new partnerships.

Our concern, though, is that there may be some that seek to cut corners, thereby jeopardising their contractors, their clients and their own businesses. For our part, we will continue to offer support and advice to prevent this as best we can. For contractors in particular, it’s crucial to ensure you and the agency you’re partnered with are fully compliant no matter where in the world your assignment is.

As such we would always recommend that you seek advice pertinent to your individual circumstances.

Headaches, uncertainty, mitigation

As mentioned in our sixth scenario, health insurance is going to be another important part of contracting for 2021. While we have always recommended that contractors have this cover, there’s no doubt that the pandemic has pushed it much further up the agenda for international contractors.

Further related to the coronavirus, we’ve also already seen an increase in remote working where regional lockdowns have made travel impossible. This does create a significant compliance headache for those working in their home country for a project being run in another location and the potential to be caught out as a result of a simple misclassification or reporting error is huge.

While uncertainty does lie ahead, with both Brexit and covid-19, we can assert with some confidence that compliance will continue to be both crucially important and increasingly complex for contractors, where they wish to work internationally. To mitigate the risks, it’s highly sensible that you seek expert guidance.

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Written by Michelle Reilly

Michelle Reilly is the CEO of 6CATS International and Founder of 6CATSPRO. With over 20 years experience in developing and managing contractor workforce solutions, she is an expert in international tax compliance.
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