Full time contracting for US company - where do I stand?

[jamesbrown]

I'm a UK citizen / tax payer btw.

Having spent a few days mulling this over, my current thinking is: Not to use a Ltd Co. but simply be an individual personal entity and go down the DPNI route. However as my sole means of employment will come from the one source (the US company with no UK/ European presence), will IR35 come into this at all? I've done some reading and don't imagine it could, but...

Assuming I go down this route of 'self employed not through a Ltd. Co.' I presume I can still claim reasonable expenses against tax? I work from home much of the time and as such rely on a proportion of the house itself, its electricity, broadband, phone etc.

Thanks again,

Stephen

You will be an employee of the U.S. company, you won't be self-employed. Certainly, IR35 won't apply. If you want to be self-employed (a sole trader), you can do that too, but that's also a different set-up (and IR35 would not apply). Again, a DPNI scheme is for employees of foreign companies that do not have a U.K. tax presence, not for the self-employed or for U.K. companies. If you call HMRC, they will quite likely not be aware of the PAYE direct schemes () and suggest that you operate as a sole trader, but a DPNI scheme is nevertheless available to you.

[briangriffin]

Hi!

What is the differentiating factor between being employed & self-employed?

Whilst I will be supplying a service equivalent to 40 hours software consultancy each week, its on a contract basis for which I invoice each month. so am I not self-employed?

Apologies if I've confused matters along the way...and thanks again for your help with this.

Stephen

[jamesbrown]

Hi!

What is the differentiating factor between being employed & self-employed?

Whilst I will be supplying a service equivalent to 40 hours software consultancy each week, its on a contract basis for which I invoice each month. so am I not self-employed?

Apologies if I've confused matters along the way...and thanks again for your help with this.

Stephen

To be clear, I'm not saying whether you will or will not be self-employed, I am simply saying that, if you're employed, you will need a DPNI scheme. If you're self-employed, you have a bunch of options. I have no idea what the intentions of you or your employer/client may be. Do they want to employ you? Do you want a contract of employment? In the first instance, the contract will describe the relationship. It will either represent a contract of service (employment) or a contract for services. Once that's established, your options will become clearer. If they want a pseudo-employee (looks like an employee, smells like an employee, contract says not an employee), then this will have other (e.g. tax) implications, but the contract is the starting point.

[briangriffin]

To be clear, I'm not saying whether you will or will not be self-employed, I am simply saying that, if you're employed, you will need a DPNI scheme. If you're self-employed, you have a bunch of options. I have no idea what the intentions of you or your employer/client may be. Do they want to employ you? Do you want a contract of employment? In the first instance, the contract will describe the relationship. It will either represent a contract of service (employment) or a contract for services. Once that's established, your options will become clearer. If they want a pseudo-employee (looks like an employee, smells like an employee, contract says not an employee), then this will have other (e.g. tax) implications, but the contract is the starting point.

Fantastic, thanks - you've been a great help and it's much, much clearer in my head now.

Regards,

Stephen

[jamesbrown]

Fantastic, thanks - you've been a great help and it's much, much clearer in my head now.

Regards,

Stephen

No problem. Feel free to check in again when you know more. Also, bear in mind that, while the working relationship is important, there are other important things too. For example, U.S. companies are notoriously litigious, so make sure you understand your personal exposure (if any) and insure against it.

[WordIsBond]

If the company is willing to work with you it should be fairly easy to structure the contract in a way that puts you outside IR35. Then you could do as suggested above and go Ltd.

There have been some recent somewhat-related threads that may or may not apply:
http://forums.contractoruk.com/accou...d-company.html
http://forums.contractoruk.com/accou...count-vat.html