Determining IR35 Status - EU clients

[jamesbrown]

Many thanks James.

Ok, I Had actually found that doc and performed a search on it for overseas companies. Nothing. Words searched include International, Overseas, Foreign.

Right, exactly. Little or no distinction.

However, for an example of a distinction, take a look at 10(2)61(R)(7) in the existing legislation for the public sector (FOI), which is not amended by the draft. Here's a link, as originally passed:

Finance Act 2017

[Pring]

I'm really struggling for clarity here too. I run a UK based PSC that contracts for a US based company. I've seen a lot saying that the US based company is still liable for making the determination but many places where it is stated that they aren't. In addition to the ones noted on the thread I noticed this definition of "Fee Payer" today in Fee-payer responsibilities under the off-payroll working rules - GOV.UK

As a fee-payer, you must:

• be resident in the UK, or have a place of business in the UK

If no-one in the labour supply chain, except for me/my PSC, is resident in the UK then that looks like no-one is classed as the Fee Payer under the off payroll working rules? So the determination stays with me, as it does currently?

[jamesbrown]

I'm really struggling for clarity here too. I run a UK based PSC that contracts for a US based company. I've seen a lot saying that the US based company is still liable for making the determination but many places where it is stated that they aren't. In addition to the ones noted on the thread I noticed this definition of "Fee Payer" today in Fee-payer responsibilities under the off-payroll working rules - GOV.UK



If no-one in the labour supply chain, except for me/my PSC, is resident in the UK then that looks like no-one is classed as the Fee Payer under the off payroll working rules? So the determination stays with me, as it does currently?

This is all draft guidance that has been yanked (and it contains a number of errors) but, from Google's web cache:

ESM10025 - Employment Status Manual - HMRC internal manual - GOV.UK

and:

ESM10026 - Employment Status Manual - HMRC internal manual - GOV.UK

[Pring]

This is all draft guidance that has been yanked (and it contains a number of errors) but, from Google's web cache:

https://www.gov.uk/hmrc-internal-manuals/employment-status-manual/esm10025]ESM10025 - Employment Status Manual - HMRC internal manual - GOV.UK[/url]

and:

https://www.gov.uk/hmrc-internal-manuals/employment-status-manual/esm10026]ESM10026 - Employment Status Manual - HMRC internal manual - GOV.UK[/url]

Thanks, those are interesting. I won't hold my breath but it'd be nice if they could flesh out the Examples the two scenarios I tend to work with:

Worker’s intermediary -> Overseas Agency -> Overseas End Client
Worker’s intermediary -> Overseas End Client

It'd also be interesting to know what they expect the PSC to do when the Overseas Agency/End Client neglects to provide a determination, since seemingly there's no real advantage for them to do so.

[jamesbrown]

Thanks, those are interesting. I won't hold my breath but it'd be nice if they could flesh out the Examples the two scenarios I tend to work with:

Worker’s intermediary -> Overseas Agency -> Overseas End Client
Worker’s intermediary -> Overseas End Client

It'd also be interesting to know what they expect the PSC to do when the Overseas Agency/End Client neglects to provide a determination, since seemingly there's no real advantage for them to do so.

Agree. Ultimately, the draft legislation and this new guidance suggest that an overseas supply chain is treated no differently than a domestic supply chain for the purposes of IR35, so the Overseas Agency would be the Fee Payer in your first example, the Overseas End Client in your second, and the Overseas End Client always provides the SDS and, until they do (and with reasonable care), they remain the Fee Payer too. So, absence a clue (which we can assume), the Overseas End Client will be on the hook.

[WordIsBond]

the Overseas End Client will be on the hook.

Well, HMRC will be asserting that they are on the hook, anyway. Somehow I suspect when they try to reel in that line they'll find that it isn't strong enough to land the Overseas End Client anywhere that they have any jurisdiction....

[jamesbrown]

Well, HMRC will be asserting that they are on the hook, anyway. Somehow I suspect when they try to reel in that line they'll find that it isn't strong enough to land the Overseas End Client anywhere that they have any jurisdiction....

They're going to need a bigger boat.

[Pring]

Agree. Ultimately, the draft legislation and this new guidance suggest that an overseas supply chain is treated no differently than a domestic supply chain for the purposes of IR35, so the Overseas Agency would be the Fee Payer in your first example, the Overseas End Client in your second, and the Overseas End Client always provides the SDS and, until they do (and with reasonable care), they remain the Fee Payer too. So, absence a clue (which we can assume), the Overseas End Client will be on the hook.

Good explanation, thanks. I understand that overseas end client is on the hook for the determination but for agency/end-client as fee payer I’m not sure how to square that with the statement at Fee-payer responsibilities under the off-payroll working rules - GOV.UK about fee payers having to be UK Resident or have a place of business in the UK. Unless that’s been superseded.

[BR14]

They're going to need a bigger boat.

yeh, ford class.

[jamesbrown]

Good explanation, thanks. I understand that overseas end client is on the hook for the determination but for agency/end-client as fee payer I’m not sure how to square that with the statement at Fee-payer responsibilities under the off-payroll working rules - GOV.UK about fee payers having to be UK Resident or have a place of business in the UK. Unless that’s been superseded.

Agree that it's seemingly contradictory. However, 10(2)61R(7) introduces the concept of "deemed residency", so I assume the guidance is just phrased loosely. Afterall, you can't simultaneously say that overseas clients and fee payers are deemed resident and that say they have nothing to do, so I'm going with the draft legislation as being the thing to read and the guidance as semi-useful fluff.