Ok, this is for a friend, not me. Despite what most everyone thinks after reading that opening sentence, it really isn't me, because I think it's totally daft what he wants to do.
So, my mate works for a relatively small company. He's been with them a long time, there's a lot of trust, he works at home most of the time.
He wants to emigrate to a non-EU / second-world country. (I told you this was daft.) His company doesn't want to employ him there because they don't want to be subject to whatever employment laws and taxes might emerge from the minds of second-world bureaucrats. (Not everyone in this story is daft, I'm with them.) They are willing to have him continue to work for them remotely as a self-employed individual. But he's definitely under Supervision/Direction/Control. That's probably not an issue once he's there, because they don't seem to have any IR35 equivalent, and they'll hopefully just be happy to have him there and paying tax. There will be no agency involved, everything will be direct.
But he's been told that his immigration process into this country will be difficult if he doesn't have a track record of self-employment before applying. He'll probably apply in about a year's time, so he wants to go self-employed now. Again, no agency.
So, if I understand correctly:
1) He'd pay Class 2 and Class 4 NIC, and income tax, as a sole trader.
2) IR35 won't apply since there's no intermediary.
3) But with him clearly under SDC, presumably with MOO, and no right of substitution, I assume there is a reasonable risk that HMRC would come back and say, "This is employment" and expect the company to pay employer NIC, a risk they don't want to take.
4) And the only safe way to protect the company from that is for him to incorporate and work inside IR35.
5) But if he forms a limited company and works for it he's not legally self-employed and has gained nothing.
So the best solution is for him to get some common sense and not emigrate, but failing that, are points 1-4 accurate? And if so, does anyone have any bright ideas to help this guy out? His company is willing to work with him but not take on a lot of risk, and they want him to be the one to figure out how to make this work.
He actually is doing this for a good cause, he wants to go work 2/3 time in IT, and work half-time (unpaid) in an orphanage. So I'd like to help him but don't know enough about the rules for sole traders.
So, my mate works for a relatively small company. He's been with them a long time, there's a lot of trust, he works at home most of the time.
He wants to emigrate to a non-EU / second-world country. (I told you this was daft.) His company doesn't want to employ him there because they don't want to be subject to whatever employment laws and taxes might emerge from the minds of second-world bureaucrats. (Not everyone in this story is daft, I'm with them.) They are willing to have him continue to work for them remotely as a self-employed individual. But he's definitely under Supervision/Direction/Control. That's probably not an issue once he's there, because they don't seem to have any IR35 equivalent, and they'll hopefully just be happy to have him there and paying tax. There will be no agency involved, everything will be direct.
But he's been told that his immigration process into this country will be difficult if he doesn't have a track record of self-employment before applying. He'll probably apply in about a year's time, so he wants to go self-employed now. Again, no agency.
So, if I understand correctly:
1) He'd pay Class 2 and Class 4 NIC, and income tax, as a sole trader.
2) IR35 won't apply since there's no intermediary.
3) But with him clearly under SDC, presumably with MOO, and no right of substitution, I assume there is a reasonable risk that HMRC would come back and say, "This is employment" and expect the company to pay employer NIC, a risk they don't want to take.
4) And the only safe way to protect the company from that is for him to incorporate and work inside IR35.
5) But if he forms a limited company and works for it he's not legally self-employed and has gained nothing.
So the best solution is for him to get some common sense and not emigrate, but failing that, are points 1-4 accurate? And if so, does anyone have any bright ideas to help this guy out? His company is willing to work with him but not take on a lot of risk, and they want him to be the one to figure out how to make this work.
He actually is doing this for a good cause, he wants to go work 2/3 time in IT, and work half-time (unpaid) in an orphanage. So I'd like to help him but don't know enough about the rules for sole traders.
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