Teleworking as a sole trader from the UK for a non-EU (Swiss) client (former employer
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    Default Teleworking as a sole trader from the UK for a non-EU (Swiss) client (former employer

    I currently work part-time (60%) dealing with online documentation indexing and organisation for a small Swiss NGO in Geneva. My wife works in the UK and I'm looking to relocate back home, not least because on an NGO salary the cost of accommodation and compulsory health insurance in Geneva is high.

    Most of my work is possible by teleworking (I already telework from home in Geneva much of the time) although the occasional face to face meeting in Geneva or New York would still be needed, especially at certain UN Conference times where we have a full-time presence.

    The NGO is willing to let me work from home in the UK (it already has people doing so from Brazil and Canada) but has no organisational presence in the UK so I would have to operate as a contractor. I would be doing exactly the same work as before, for a single client (the other 40% of my time was supposed to be working for another Swiss foundation but so far it has failed to find funding so I am not yet getting paid for any work done although hope springs eternal!), so I would be in a classic IR35 situation if I were to form a UK limited company.

    I was however considering operating as a sole trader because of less administrative hassle and paperwork. I would be under the VAT threshold and am now (rather to my surprise until I look in the mirror) 66 and so no longer required to pay even Class 4 NI contributions.

    My uncertainty is over where the liabilities and penalties might rest if HMRC considers this to be disguised 'employment', as well they might. Our NGO is registered in Geneva and has no legal presence in the UK, so the only target within effective reach of HMRC would be me! I don't think there exists any legal provision to make me as the 'shadow employee' of a Swiss client liable for deemed 'employer' NIC or other obligations, but it would be good to be more sure of this! I don't want to get myself into a legal morass or my current employer / future client in Geneva into one either.

    All advice gratefully received!

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    If you no longer have to pay NIC's why would IR35 be a worry to you? IR35 is all about paying NIC's on all earnings, clearly it can't apply to you can it? Sole trader sounds a perfect solution for you, good luck.

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    You say you need to set yourself up as a contractor, but I don't see why. If you're an employee, you're an employee, and your employer may have responsibilities in the UK. For an employee of a company with no UK presence, you need a PAYE direct scheme (DPNI for PAYE and NI) whereby you organise your personal tax via the PAYE system. Bear in mind that your employer may establish a presence for NI purposes too:

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

    Of course, you may choose to become self-employed, but it needs to reflect reality, regardless of the particular way in which you operate (sole trader or Ltd).

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    Quote Originally Posted by Gonderange 78 View Post
    I don't think there exists any legal provision to make me as the 'shadow employee' of a Swiss client liable for deemed 'employer' NIC or other obligations, but it would be good to be more sure of this! I don't want to get myself into a legal morass or my current employer / future client in Geneva into one either.

    All advice gratefully received!
    P.s. There is, since 2012. An employer based in Switzerland is considered UK resident for NI purposes.

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    Many thanks to everyone for the rapid and informative responses!

    I didn't realise that there had been a change in 2012 and that a Swiss employer could be treated as being UK registered or as having a place of business in the UK: many thanks for the information! From the responses received, it looks like I could remain an employee of the Swiss NGO after all.

    However, I'm still not entirely clear what should happen in my case, particularly as regards consequences for my current employers, because:

    (a) I am 66 so I would have no UK National Insurance employee contributions to make anyway.

    (b) Employers in the UK do have a liability to make employer NI contributions even for employees over 65 but the change in 2012 to include Swiss employers of employees based in the UK indicated in National Insurance for people in the UK working where there is no employer in the UK indicates that "an employer in another European Union (EU) Member State will also be treated as being UK registered or having a place of business in the UK for National Insurance purposes where the employee is in UK National Insurance". Being sufficently venerable, I would not be in UK National Insurance so, from the wording above , then logically neither would my Swiss employer and therefore they would be exempt from paying any employer UK NI contribution. Is my interpretation correct? (I don't see how they could pay employer NI anyway as they have no UK presence or business associates of any kind).

    As for my income tax, a DPNI scheme would indeed seem to be the way to go.

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    You should have your employer seek expert advice on their own liabilities. They're going to need to do this anyway - they can't just half-arse the placement of an employee in another country. I understand that they're an NGO and that you want to minimise their hassle, but they are ultimately responsible for establishing their status in the UK, and they shouldn't be relying on your advice for that. However, you can advise them about your own tax status. In this particular instance, based on what you've said, it should be pretty straightforward for your employer to establish their own status; professional advice should not be too expensive, but they must seek that.

    To set up a DPNI scheme, contact your local HMRC office once you're ready to proceed. You may not immediately find someone that knows how to do this, but there will be someone that does know - it isn't complicated.

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    Oh, and if there's no NI, I think the scheme you'll need for your personal taxes is DPGEN, not DPNI, but HMRC will advise on the precise scheme for direct PAYE/NI.

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    As the request to do this came from me, rather than my employer wanting to transfer me to the UK, and they are only willing to do it if hassle for them is minimised, I think I'm going to have to hold their hand on this and present them with their options, who to contact and where, etc. I don't think they would have a clue where to start. I suspect the UK's 13.8% employer NI charge on my salary is going to be more than they have to pay to Canton Geneva for the similar Swiss charge, so it could be a sticking point.

    My employer will probably only do this if it's cost-neutral to them, and if I have to take a salary hit to compensate, plus still need to attend meetings in Geneva from time to time (they will not pay for travel or accommodation) then the savings made by working from home in the UK are going to be considerably offset by Geneva travel and accommodation costs plus any salary reduction to keep employer costs neutral.

    It may be financially preferable to look at remaining employed in Geneva but living in cheaper France and commuting across the border - about half of Geneva's working population already does - but these 'frontalier' arrangements are, for UK passport-holders, likely to become very tricky once Brexit bites.

    Anyway, thanks for all the helpful advice and information. I will fly the UK idea past my employers again, but am not over hopeful ...

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    Quote Originally Posted by Gonderange 78 View Post
    As the request to do this came from me, rather than my employer wanting to transfer me to the UK, and they are only willing to do it if hassle for them is minimised, I think I'm going to have to hold their hand on this and present them with their options, who to contact and where, etc. I don't think they would have a clue where to start. I suspect the UK's 13.8% employer NI charge on my salary is going to be more than they have to pay to Canton Geneva for the similar Swiss charge, so it could be a sticking point.

    My employer will probably only do this if it's cost-neutral to them, and if I have to take a salary hit to compensate, plus still need to attend meetings in Geneva from time to time (they will not pay for travel or accommodation) then the savings made by working from home in the UK are going to be considerably offset by Geneva travel and accommodation costs plus any salary reduction to keep employer costs neutral.

    It may be financially preferable to look at remaining employed in Geneva but living in cheaper France and commuting across the border - about half of Geneva's working population already does - but these 'frontalier' arrangements are, for UK passport-holders, likely to become very tricky once Brexit bites.

    Anyway, thanks for all the helpful advice and information. I will fly the UK idea past my employers again, but am not over hopeful ...
    Sure, it may not be equitable. You could always have them call HMRC directly about their NI situation, if they don't want to take independent advice. Alternatively, you could call HMRC and relay the situation to your employer, together with a contact person. Again, they would ordinarily need to setup the NI payments (via HMRC, who will create the employer record for them), and you would need to set-up the PAYE direct scheme for income tax (DPGEN). Alternatively, you should be able to file a SATR at year end, rather than using RTI (I think HMRC generally offer this as an alternative to a PAYE direct scheme).

    I assume you're not involved in the administration of their business (e.g. have contract authority), which could create a permanent establishment for your employer (and, hence, other liabilities).

    Of course, if you're acting in a self-employed capacity, that changes things completely, but it depends on the facts, and it sounds like you're an employee.

    Bottom line, it really shouldn't be too difficult if you're a regular employee, working from home, and not acting as an agent of the NGO in the UK. However, whether it's equitable in comparison to your current arrangement is another matter, and you may need to share the hit.

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    I would not be so certain that OP is necessarily an employee.

    Are the people in Brazil and Canada employees or self-employed/independent? If they are not employees, it would be easier to argue that the change in locale is indicative of a change in status. Employees on site, contractors off-site and out of the country.

    How much are you supervised in your work? How much supervision / direction / control is there? You said "documentation organisation" -- are you making organisation decisions, or are they making those, and you implementing them?

    Is it feasible for you to do this work on a fixed cost rather than hourly basis? If so, that would probably yank you right out of any IR35 / employment concerns, if you've been hourly before but are fixed cost now.

    How much Mutuality of Obligation is there going to be?

    Do you have employee benefits now, and will you be forgoing any of them? Or, would you be willing to forgo them for a higher rate?

    Before just saying that I was inside IR35, I'd read up on it and consider a restructuring of your relationship, if possible, to put you outside it. If you can get an IR35 friendly contract, it is going to be difficult for HMRC to prove you are inside, because they can't compel the engager to discuss your case with them. You can give them the contract and have someone (IPSE or QDOS) represent you, and they will probably go chase someone else. And honestly, at 60% time and at your age, you aren't likely to be worth chasing for them anyway.

    So that's where I'd start. See if you can structure things with enough changes to justify an outside-IR35 status, and then probably go sole trader.

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