Continuing to work for a Canadian company after returning to the UK

[canada]

I'm in a situation that has me confused and looking for some good advice before I make some bad decisions. So I'm hoping that somebody here has done something similar or can point me in the right direction.

I am currently an ex-pat living in Canada and have been happily employed as a permanent employee of a Canadian company since I moved from the UK 15 or so years ago. Right now I'm at a place where I would like to return to the UK, but not have to give up my job because I really like the company and the people I work with. Since I already work remotely within Canada there aren't any new technical hurdles to me doing my job introduced by me moving between countries, just hurdles with getting paid and paying taxes.

I think the best solution for me (and why I'm here) would be to approach my employer and suggest that I move our relationship to a contract basis, allowing me to take control of payroll and tax deductions in the UK instead of my employer making them to the Canadian government. Since I would be residing in the UK I'm assuming that my taxes will need to be paid there, but since my employer doesn't have a presence in the UK they won't be able to handle this for me.

Does this sound feasible, and legal? If so, are there any places I could go to find information specific to my situation on how I would be able to get things setup properly? I would only have one "customer" at the beginning of this adventure, but as I get more settled into my new environment I may want to look for other opportunities to add more. So while I would want things to be as simple as possible for the initial transition, I wouldn't want to make any decisions that limit me one or two years down the road.

As a lesser concern, if I'm still getting paid in Canadian dollars into a Canadian bank account, I'm assuming that I would have to manually transfer the funds into pounds when I want to actually get paid. Or is there a better way to handle this, since my employer can only deal with Canadian dollars?

is there anything else I should be mindful of that would possibly blindside me?

[stek]

I think you will be caught by IR35, Fri-Mon scenario so you'd need to up the remuneration levels to compensate, I'd say three times to even things out. Check this though, a quick Google tells me IR35 applies even when overseas organisations are involved...

Also you can have the funds converted from CAD to STG as it comes in but you will be charged, usually a fee plus exchange as at rate not wholly to your advantage.

[TheFaQQer]

If you set up in the UK via a limited company, then you may need to add on extra to account for IR35, since you will effectively still be their employee.

Work out what salary you need to earn, and then see what rate you should charge to give you that income. Make sure that you factor in costs of benefits and holidays that you are currently getting. Your company would then invoice the client and they pay you - make sure you sort out decent payment terms as you'll now be paid out of their AP process rather than their payroll process.

As far as getting paid, you can either look for a UK bank which allows payments in CAD, or invoice in GBP, or invoice in CAD and get paid into a UK bank account which will charge a conversion fee, or open a Canadian bank account for your UK company. I would NOT recommend getting paid into a personal account in Canada and then remitting that money to the UK - sounds like asking for trouble.

Calculate your costs carefully and good luck with it all.

[TheCyclingProgrammer]

Do you need to work through a Ltd? Couldn't you just register as self-employed and pay Class 2/4 NIC and income tax yourself? IR35 not an issue then and you might have some more flexibility on expenses.

Sign up to a system like FreeAgent or similar that lets you manage your books and handles multi-currency billing. You can choose to invoice in CAD or GBP and it will take care of any currency exchange gains/losses.

[GazCol]

I think you will be caught by IR35, Fri-Mon scenario so you'd need to up the remuneration levels to compensate, I'd say three times to even things out. Check this though, a quick Google tells me IR35 applies even when overseas organisations are involved...

Also you can have the funds converted from CAD to STG as it comes in but you will be charged, usually a fee plus exchange as at rate not wholly to your advantage.

IR35 might apply in theory, but would a Canadian company be under any kind of pressure to answer questions from HMRC in relation to working practices?

[canada]

I'm curious if it is a given that I would be caught by IR35?

The contract being floated right now would be for 40 hours a week, 48 weeks a year, initially for a period of two years. If things work out then I hope there would be an extension.

The expectation is that I would work set hours a day, either 4x10hrs or 5x8hrs, but there would be flexibility on those hours outside of attending meetings. For the actual work I would be doing a combination of handling trouble tickets as they come in, and also working on new projects as required. Outside of a general rule of production issues have priority, I have the freedom to choose what I work on based on priorities that I determine myself to ensure that the internal deadlines of specific projects are met.

I would be exclusively working from home on my own equipment and paying for my own day-to-day expenses for phone, Internet, training, etc.

They will not consider this arrangement at all unless I form a limited company, and I would be required to carry professional indemnity insurance in case I screw something up badly enough that they need to sue me to recoup damages.

There would not be a right to substitution. I would be in this contract relationship specifically because they could no longer employ me as a regular employee, but still value my personal experience, knowledge, and skillset.

In Canada this would fall on the right side of the equivalent of IR35. Several of the people I work with directly are consultants under a similar arrangement. I know I should really consult a professional lawyer, and will to assist in contract negotiations if I decide to go down this path, but at this point I don't want to spend money on what may just be a pipedream. Or is there a professional service that would be willing to offer a free consultation prior to me engaging them in assisting with an actual contract.

If I'm inside then I'm inside, I would want to handle the cost legitimately and see if they would be willing to up my rate rather than chance it. But I obviously also want to take home as much as I can, and is legal.

[SueEllen]

I'm curious if it is a given that I would be caught by IR35?

HMRC would consider you do simply because they were your ex-employer.

As you don't have a right of substitution as it looks like fake self-employment to avoid tax especially as your role hasn't changed.

If you worked as self-employed paying NICs and income tax particularly the contract is with you personally then you wouldn't have to worry about IR35.

In regards to employees who are homeworkers not having to pay for phone, Internet, training etc they do. However it's not tax deductible. The treasury select committee would like to remove these perks.

I would probably do an investigation and calculation on take home pay for working as self-employed before talking to a UK based lawyer.

[canada]

I looked into operating as a sole trader first, but unfortunately it was made very clear to me that I would need to both incorporate and carry insurance in order for me to work for them as a non-employee.