Creating a company in the UK to land some Outside IR35 contract?

[lewisrunner]

Hi all,

So I'm currently living in Europe with EU citizenship and trying to land a contract job in the UK.
I see many outside IR35 contracts stipulating "fully remote in the UK".
So I have 2 questions :
- Why does it matter for the contractor to be in the UK since the contract will be outside IR35?
- Can I just create a company in the UK remotely to make these recruiters happy?

Thanks!
PS: Obviously, the question is only for contract jobs outside IR35, fully remote. I'd understand why an on-site/hybrid job would want the contractor to be in the country.

[WTFH]

Hi all,

So I'm currently living in Europe with EU citizenship and trying to land a contract job in the UK.
I see many outside IR35 contracts stipulating "fully remote in the UK".
So I have 2 questions :
- Why does it matter for the contractor to be in the UK since the contract will be outside IR35?
- Can I just create a company in the UK remotely to make these recruiters happy?

Thanks!
PS: Obviously, the question is only for contract jobs outside IR35, fully remote. I'd understand why an on-site/hybrid job would want the contractor to be in the country.

Hi and welcome to the forum.
There’s many reasons why a client might specify where they want the work done, and it can vary from one industry to another. The most common one I have seen is around data security. e.g. if you work in med/pharma, then any patient identifiable data must stay within the UK (there are a few exceptions, but they are very costly). For someone working outside the UK to have access to that data is a serious breach.
There’s another big reason, which is rates. If a client is happy to take a resource who is located outside the UK, then there’s no need to pay UK rates, just get an off-shore body shop in India to fulfil the contract for half the price.

[jamesbrown]

Just to add to WTFH's useful post, even if that were possible, it would not be a good idea to tell the client one thing (e.g., that you are working from the UK) while doing another (i.e., not working from the UK) and hence breaching your contractual terms with the client.

[lewisrunner]

Hi and welcome to the forum.
There’s many reasons why a client might specify where they want the work done, and it can vary from one industry to another. The most common one I have seen is around data security. e.g. if you work in med/pharma, then any patient identifiable data must stay within the UK (there are a few exceptions, but they are very costly). For someone working outside the UK to have access to that data is a serious breach.
There’s another big reason, which is rates. If a client is happy to take a resource who is located outside the UK, then there’s no need to pay UK rates, just get an off-shore body shop in India to fulfil the contract for half the price.

Make sense!
Thank you.
Some people told me that somehow it can be important that the owner of the company has British citizenship. Is it true? Does it impact legislation/taxes?

Just to add to WTFH's useful post, even if that were possible, it would not be a good idea to tell the client one thing (e.g., that you are working from the UK) while doing another (i.e., not working from the UK) and hence breaching your contractual terms with the client.

I plan on being fully honest.
But I feel that saying "My company is based in the UK, but I'm a digital nomad so I might be in a different country every 3 months" would help, especially with the recruiters. It'd put me in a different category than the thousands of applicants living in India, Africa, Middle East, Eastern Europe, etc... (no offense to them at all).

[jamesbrown]

If you're honest and you understand the tax implications of creating a UK company both in terms of UK tax and tax in your working jurisdiction (relative to any national rules and international tax treaties), as well as the implications of running it from overseas (in terms of creating a Permanent Establishment), then knock yourself out. Just be aware of the number of "ifs" there to bite you in that last sentence.

[WTFH]

But I feel that saying "My company is based in the UK, but I'm a digital nomad so I might be in a different country every 3 months" would help, especially with the recruiters. It'd put me in a different category than the thousands of applicants living in India, Africa, Middle East, Eastern Europe, etc... (no offense to them at all).

Yes, it would put you in a different category to those with permanent residence in one country. But not in the better category you might imagine.
And it’s not the agents you should think about, but the end client. They are teh one who pays for you and who expects certain things for the price you charge.

[northernladuk]

- Why does it matter for the contractor to be in the UK since the contract will be outside IR35?
- Can I just create a company in the UK remotely to make these recruiters happy?

Thanks!
PS: Obviously, the question is only for contract jobs outside IR35, fully remote. I'd understand why an on-site/hybrid job would want the contractor to be in the country.

Some good advice already offered but they are missing a very key point which, in itself, kills your idea dead. Agents will go for the path of least resistance. They want to deal with what they know and move on to the next gig. What they know is UK LTD with UK resident who is the majority, and in most cases, only shareholder. Anything else is dead to them. I know agents are as tight as it comes and are out to maximise their commission. They will often play games to knock some money off a rate but I don't think they are in to the game of dropping rates even further for contractors that don't meet their criteria. You not being a UK resident will get their alarm bells ringing straight off. Even if you offered to work a much lower rate it's just a risk they won't want to take when they can make easy money from 'normal' contractors.

It matters because clients still want to see their suppliers. Not always, granted, but they will want to see a representative or have you there for a few meetings. Even if we are outside the client see's us different to your big outsourcers. It's not unreasonable to think a client will want to see the whites of their suppliers eyes from time to time so why bugger about with someone that is out of the UK when there is more than enough quality people with in commutable distance of their sites?

I think you are missing some difficult hurdles to actually creating a UK Ltd if you are abroad. I could be wrong but I don't believe it's that straight forward. Even if it is, again, it's a difficult ask of a client to consider 5 contractors that can be at their door tomorrow for interview and on site whenever they want against someone that the client can never physically meet.

It's just too much for agents whatever the art of the possible is. They want quick easy money and generally will not be equipped or prepared to dick about with non residents whatever the state of their LTD etc. For example, the contract between the agent and LTD is governed by UK law. How does that apply when the worker is not in the UK? Does the a client have a policy about no UK access to data, what are the legal hoops to allow small supplies to access it? What about physical kit or BYOD policies? Does it meet their risk policies when frankly it really doesn't need to if they get a 'normal' UK contractor? If they are going to jump through all these loops why don't they just farm that role out for a third the price to India? I have no idea, nor will the agent and they won't be bothered about spending time and money researching it.

So, in a nutshell, both points above are possibly easy to sort out but adding a level of complexity the next contractor behind you doesn't bring is just not going to work.

My company is based in the UK, but I'm a digital nomad so I might be in a different country every 3 months" would help,

Not a chance and completely the opposite. As I say above, they don't know what that entails so will just move on to the next CV. Jurisdiction of the contract, tax implications, data and security implications etc.. No thank you. The world might have moved on but agents want quick and easy cash. End of story.

[lewisrunner]

Some good advice already offered but they are missing a very key point which, in itself, kills your idea dead. Agents will go for the path of least resistance. They want to deal with what they know and move on to the next gig. What they know is UK LTD with UK resident who is the majority, and in most cases, only shareholder. Anything else is dead to them. I know agents are as tight as it comes and are out to maximise their commission. They will often play games to knock some money off a rate but I don't think they are in to the game of dropping rates even further for contractors that don't meet their criteria. You not being a UK resident will get their alarm bells ringing straight off. Even if you offered to work a much lower rate it's just a risk they won't want to take when they can make easy money from 'normal' contractors.

It matters because clients still want to see their suppliers. Not always, granted, but they will want to see a representative or have you there for a few meetings. Even if we are outside the client see's us different to your big outsourcers. It's not unreasonable to think a client will want to see the whites of their suppliers eyes from time to time so why bugger about with someone that is out of the UK when there is more than enough quality people with in commutable distance of their sites?

I think you are missing some difficult hurdles to actually creating a UK Ltd if you are abroad. I could be wrong but I don't believe it's that straight forward. Even if it is, again, it's a difficult ask of a client to consider 5 contractors that can be at their door tomorrow for interview and on site whenever they want against someone that the client can never physically meet.

It's just too much for agents whatever the art of the possible is. They want quick easy money and generally will not be equipped or prepared to dick about with non residents whatever the state of their LTD etc. For example, the contract between the agent and LTD is governed by UK law. How does that apply when the worker is not in the UK? Does the a client have a policy about no UK access to data, what are the legal hoops to allow small supplies to access it? What about physical kit or BYOD policies? Does it meet their risk policies when frankly it really doesn't need to if they get a 'normal' UK contractor? If they are going to jump through all these loops why don't they just farm that role out for a third the price to India? I have no idea, nor will the agent and they won't be bothered about spending time and money researching it.

So, in a nutshell, both points above are possibly easy to sort out but adding a level of complexity the next contractor behind you doesn't bring is just not going to work.


Not a chance and completely the opposite. As I said above, they don't know what that entails so will just move on to the next CV. Jurisdiction of the contract, tax implications, data, and security implications, etc.. No thank you. The world might have moved on but agents want quick and easy cash. End of story.

Thanks for taking the time to write such a detailed answer.
You and I see the situation in the exact same way: recruiters and business owners want to deal with something they're comfortable with. Not with that weird guy with an unknown legal situation from somewhere in the world.

The only difference is that you see it in a more black-and-white way than me.
For me, it's a number game and a matter of conversion rate. Reducing the friction is what I'm working on.

If I can get from 0.1% to 0.5% by saying "My company is in the UK", that's already a win

[northernladuk]

Thanks for taking the time to write such a detailed answer.
You and I see the situation in the exact same way: recruiters and business owners want to deal with something they're comfortable with. Not with that weird guy with an unknown legal situation from somewhere in the world.

The only difference is that you see it in a more black-and-white way than me.
For me, it's a number game and a matter of conversion rate. Reducing the friction is what I'm working on.

If I can get from 0.1% to 0.5% by saying "My company is in the UK", that's already a win

It's only black and white as we only see the text on the screen. You know your situation better than us.

But I don't think it will make one iota of difference to the 0.1%. Agents will not engage any company that is not in the UK so it's the bare entry point. It's not a benefit. If you said it wasn't you've have a flat 0% chance.