"Representation"?

[chuddy]

Hello all,

Am new to all of this and currently still a permie :P

I've been offered a contract from a company that is outside the EU... they need somebody to help them with things like implementation (design/dev), support of existing contracts and assisting their exising clients with deployments (all in the UK).

I intend to set up a limited company to take the work on as a contract and I will then sit as an employee of the limited company. From what I understand, the contract will not be subject to IR35 since the company that is awarding the contract does not have a UK limited company and is therefore not subject to PAYE!

However, it has been suggested to me that I would be seen as a UK "representative" of the client company and therefore subject to PAYE since the client does not have a UK company!... can anybody point me in the direction of what constitutes "representation"?

I would in fact work under the guise of the client company, but, then again, so do consultants from most consultancies - e.g. an Accenture consultant acting on behalf of a client may be introduced as an employee of the client's company in a meeting. Isn't that the same?

Any help useful!

Cheers!
Chuddy

[Troll]

You sure the end client isn't Nigerian?

[chuddy]

lol, not quite.

It's actually a North American company.

The representation thing was actually brought up by . I called their IR35 hotline to describe the situation to them (this was my first worry since there is so much discussion around this subject) and they have asked me to submit the contract to them for review...

I have also let them know that I will simply negotiate with the client until my remit is considered to be treated as a contract for my limited company and therefore not directly liable to PAYE. I also did not understand their concept of "Representation". I was fairly blunt and just said that I will just not accept the work if believe that my current terms mean that my company revenues are immediately considered for PAYE! Seems like a very odd rule as it discourages UK exports, which is never a good thing for the treasury!

[malvolio]

lol, not quite.

I called their IR35 hotline to describe the situation to them (this was my first worry since there is so much discussion around this subject) and they have asked me to submit the contract to them for review...

Thud! You're stuffed. The contract will be deemed caught by IR35. You should have read the advice around here; asking the taxman is asking for, shall we say, a less than unbiased opinion. Plus you are now on their watch list...

Also, any income you get while resident in the UK will be taxed under UK rules. Where it comes from is irrelevant.

[XLMonkey]

The guidance, such as it exists, is ref EP8115 on the HMRC website - International Employments.

IR35 status is unrelated to whether or not the company has registered for PAYE in the UK. It relates to the working relationship between you and the other company.

If the relationship is one of employment (i.e., inside IR35), then you would be deemed to be an employee of the overseas company and you would be obliged to register a PAYE scheme in the UK on their behalf and then pay income tax and national insurance. (that's what EP8115 says, anyway).

If the relationship is not one of employement, then you would need to set up a contract between yourco and theirco. You could then operate (as most of us do) as a personal service company and separate yourco's earnings from your own.

However, in doing this, you need to be careful with issues like VAT, since you would in effect be exporting your services to the US.

Whatever you decide, you should not submit your contract to HMRC for review. Their default response (irrespective of the contents of the contract), is to decide that you are inside IR35 and to start an investigation if you disagree.

[Troll]

You could always sub it out through my company for a small nominal fee

[chuddy]

I have not submitted the contract to HMRC yet, but still think that I should as I can negotiate the terms and conditions with my client until all parties are happy...

I explained this to the guy on the helpline. It's a little frustrating really. I asked him if the contract reviewer would be able to tell me what terms I would need to add to make the contract IR35/"Representation" free and he said "No" since I would be working under the rules that deem that all revenue is liable to PAYE.

However, he missed the key point... I have not started contracting yet and I can negotiate my terms and work in whatever way the HMRC decides is OK and therefore outside of IR35! It's almost as if... he wants me to pay IR35 even if I am taking precautions to be clear that I look like I am self employed, smell like I am self employed and therefore must be self employed!

The HMRC help seems a little ethereal...

[Cowboy Bob]

I have not submitted the contract to HMRC yet, but still think that I should as I can negotiate the terms and conditions with my client until all parties are happy...

I explained this to the guy on the helpline. It's a little frustrating really. I asked him if the contract reviewer would be able to tell me what terms I would need to add to make the contract IR35/"Representation" free and he said "No" since I would be working under the rules that deem that all revenue is liable to PAYE.

However, he missed the key point... I have not started contracting yet and I can negotiate my terms and work in whatever way the HMRC decides is OK and therefore outside of IR35! It's almost as if... he wants me to pay IR35 even if I am taking precautions to be clear that I look like I am self employed, smell like I am self employed and therefore must be self employed!

The HMRC help seems a little ethereal...

Rule 1 : Never ask the Revenue about IR35
Rule 2 : NEVER ASK THE REVENUE ABOUT IR35
Rule 3 : Get your contract reviewed by professionals - http://www.bauerandcottrell.co.uk/

[XLMonkey]

Submitting a contract to HMRC is a terrible idea under all circumstances. They will never acknowledge a contract as outside IR35, you are wasting your time.

You can find more authoritative guidance on the PCG's downloadable guides, where they cover this issue in more detail. You have been warned.

[chuddy]

lol, ok guys...

I'm getting the picture now.

HMRC = baddies

So I will try one of the pros then. Thank you everybody for all the advice. This forum and all the details here have been very useful indeed.

http://www.bauerandcottrell.co.uk it is then....

Can I expense this?? lol