IR35 with umbrella as a non UK resident.

[crussell]

Hi All, I have a question Im struggling to find answers to so hopefully someone here can help

I am a UK citizen but have been resident in Spain for the past 10 years. Although I take on contract work from UK clients sometimes this is billed through a Spanish Ltd company and all my tax affairs are in my country of residence. The current IR35 situation is making it increasingly hard to find contracts because agencies will often simply not even contemplate contracting to a non UK company. Although in the past this was never an issue.

My question is what would be the situation if I was to take on a contract thats "inside IR35" and set up with a UK umbrella company and operate PAYE, would I be actually taxed in the UK and would that be feasable? From my limited understanding I would pay NI contributions but any income tax liability would be in my country of residence.... A few important details:

* I am a UK citizen with a NI number
* I am domiciled and tax resident in Spain (for the last 10 years)
* I rarely travel to the UK and even when I do it's only for a few weeks out of the year
* I have a "NT" tax code with the HMRC because I am registered as non-resident
* I work remotely from Spain

Any advice on what my situation would be if I wanted to take on an inside IR35 contract or any contract using a UK umbrella company would be greatly appreciated.

Thanks

[northernladuk]

I'm not sure IR35 is the reason agents want to deal with non UK companies. It's more likely a case of there being more than enough UK LTD's so they just don't need to put the effort in to understand how to deal with non UK. They simply don't need to and agents are well known for doing the bare minimum in pursuit of lining their pockets.

OP give Lucy at Clarity Umbrella a call. You can google their number. Lucy will be able to answer your questions and discuss your options.

[crussell]

Well, I think the shift in liability to agencies to ensure compliance makes them nervous about anything "nor the norm"... I agree with your take on agencies and the reasons they don't want to deal with a non UK entity... that was partially why I was thinking about going through a UK umbrella so I can make the agencies feel a bit more warm and fuzzy about it and remove some of the friction.

Thanks for the recommendation, I'll take a look at Clarity.

[jamesbrown]

I think your understanding is about right. In principle, it may be possible to have the EeNI refunded too, but not the ErNI or AL. As you say, the NT tax code will avoid PAYE. Bigger picture, you will struggle to find a supply chain that is amenable to this. Obviously, working direct to clients is preferable in this situation.

You could also try Sue B - she's our go-to person for international tax.

[BlasterBates]

If you are actually working in Spain then you shouldn't be on a UK payroll, at least not with UK PAYE. Be careful if you are declaring only UK income in Spain that isn't taxable due to the double taxation treaty. A routine enquiry might ask for proof of actually working in the UK. You may need an international umbrella company, which can invoice the agency in the UK and pay you in Spain.

As mentioned above contact Sue B.