Contracting / Employment for Canadian company without UK presence

[Quark999]

I've tried trawling these forums to find out as much as I can about my situation, but there isn't much to go on - or I'm just too thick to search for the right things.

I am about to be offered a role as an employee of a Canadian company (based in the UK) - Technical Sales in IT essentially. They don't have a UK presence, so they are going to offer me the option of either contracting for them, or getting employed through a "virtual subsidiary" they sometimes use, through PAYE. I assume this is an Umbrella.

Various people tell me about the "tax benefits" of going down the contractor route, but from everything I've read I would be caught out by IR35 - I would only be working for a single "client", the client could tell me exactly what to do, there would be a commission element, and it would probably be rolling/not project-based, or if it was I'd be shooting myself in the foot with even less security.

In light of that, I can't see the benefits of setting up a Limited Company or even going sole trader - the Umbrella/PAYE option sounds like less hassle and risk for not much less benefit. But everyone I speak to (in terms of old a new colleagues) seems to be very blase about it and recommends contracting - am I missing something, or have they just not contracted in a long time and would just chance it?

Is this a normal arrangement for a small-ish startup? I've set up two appointments with accountants to have a "chat", but I'm not sure they really want to do much else than set up a company for me. Similarly, the "specialists" online seem to only be interested in that as well, rather than offering (paid) advice on the best route to take, and also wash their hands because the end "client" isn't UK- or even EU-based - so I'm concerned there's an extra complication there that I'm not aware of.

[RonBW]

Various people tell me about the "tax benefits" of going down the contractor route, but from everything I've read I would be caught out by IR35 - I would only be working for a single "client", the client could tell me exactly what to do, there would be a commission element, and it would probably be rolling/not project-based, or if it was I'd be shooting myself in the foot with even less security.

In light of that, I can't see the benefits of setting up a Limited Company or even going sole trader - the Umbrella/PAYE option sounds like less hassle and risk for not much less benefit. But everyone I speak to (in terms of old a new colleagues) seems to be very blase about it and recommends contracting - am I missing something, or have they just not contracted in a long time and would just chance it?

You're right - you won't be a contractor, you'll be an employee (or a disguised employee). Being inside IR35 will hit your ability to claim travel and subsistence expenses, so be careful about what you think you'll be allowed to do.

Personally, I'd get them to deal with a reputable umbrella like Contractor Umbrella rather than take either of the options you've suggested - at least you know what you're getting then, rather than having to deal with a "virtual employer" and however that might work.

[northernladuk]

I'm sure they aren't lying about not having a UK presence but it strikes me that they are offering you the worst of everything. Employee with zero benefits and rights though an Umbrella. Sounds like a horrible situation to me. Will you have a contract of employment with them directly? How will that work with the contract you have to sign with an intermediary/brolly? If the employment contract overrides everything else then I guess you are OK. I'd be looking for a bit of advice from an employment specialist, not a bunch of contractors.

But I would agree with going brolly. You don't want to be messing about with IR35 for this one.

[pscont]

Why not be a sole trader? In contrast to umbrella:

-don't need to pay ~£1200 per year to umbrella as fees
-can claim expenses in greater extent (not sure in via umbrella you can claim any)
-pay less NI and no ER NIC

So if you can be sole trader go for it. Also no IR35 for ST.

one disadvantage of being ST:
-need to have an accountant (~£300) for your tax return IF you don't feel competent enough to file it yourself (easy enough)

[Quark999]

Thanks for everyone's advice so far. I haven't seen the actual offer and options yet, so that will be the first step. It's good however to see that I'm not the only one having doubts so it is indeed worthwhile digging deeper. Especially the Umbrella option was mentioned casually and I've only recently realised that I don't really have to go with theirs.
I will also look into the sole trader option, which I had quickly dismissed as being quite similar to the contractor/Ltd option, but it clearly isn't.

It will all come down to what their actual suggested employment offer is - but I'm in the comfortable position of not having to give up my current job if things get too risky.