Being a Contractor and Remote Working for foreign company

[martinh]

Hi

this is my first time on this forum. I have just been made redundant and I have a potential opportunity to work remotely as a Contractor for a foreign company.

I am still trying to get my head around what's involved in making the transition from PAYE to Contractor and also in the context of working for a foreign company.

My first question is related to the section on this website for first Timers. Under this section it s gives three options for a Contractor; Your own Limited Company, Umbrella Company and PAYE through the Agency.

What is doesn't mention is Self-Employed – Individual this I have read on the HRMC website http://www.hmrc.gov.uk/startingup/working-yourself.pdf is there a reason why this wouldn't be mentioned under the list of options?

My second question is about working remotely as a Contractor for a foreign company. Are there any differences between a Contractor who works remotely for a UK company and one who works for a foreign company or do the same rules apply to both? In other words they are effectively the same scenario and it doesn't matter which country the money comes from!

thanks for any help

Martin

[cojak]

Answer to Q1.

No company within IT* will do business with a self-employed bod as there is no offset of risk for said company (regarding tax etc), HMRC could view them as an employee.

They will only deal with a contractor if they are seen to be employed by someone else, either the contractor's own company or an umbrella. This ensures that Tax, NI etc is somebody else's problem, not theirs.

Not sure about Q2. When I've worked for a foreign co I've worked 'over there'...

*99.99% of cases - I'm sure someone will say different...

[MPwannadecentincome]

Sorry to hear about your redundancy, good news that you may have work.

Re q2 - working for a foreign company as a contractor here.

should not be a problem at all - you are supplying a business service the company just happens to be abroad. You invoice them they pay. Still need to make sure your contract is IR35 compliant IMHO.

Best to check with your accountant if you are going ltd co or umbrella co.

A tip though if you start with an umbrella don't stay with them too long - move to ltd, the reason being there are loads of expenses you can't reclaim through an umbrella, e.g. business cards (yes business cards they won't let you claim to market yourself!), interview travel expenses (unless you are in a contract), if you are travelling - a wireless connection payg card or use of hotel internet and it you take the client out to dinner they will quibble the expense.

Good Luck!

[martinh]

Hi thanks for your replies!

I was thinking of starting with an Umbrella Company. Is it recommended to still see an accountant in this case?

I thought it would be less hassle initially just in case things don't work out with the foreign company and I end up PAYE again. Does anyone know of a good Umbrella Company?

My guess is that I won't be IR35 compliant because in the foreign companies eyes I would be a permanent worker just they are not set up for hiring foreign workers.

So in the worst case scenario if I am caught by IR35 and I move to having a limited company would I really be much better off? I think I read somewhere you can only claim about 5% of your expenses!


thanks

Martin

[ASB]

Hi thanks for your replies!

I was thinking of starting with an Umbrella Company. Is it recommended to still see an accountant in this case?

I thought it would be less hassle initially just in case things don't work out with the foreign company and I end up PAYE again. Does anyone know of a good Umbrella Company?

My guess is that I won't be IR35 compliant because in the foreign companies eyes I would be a permanent worker just they are not set up for hiring foreign workers.

So in the worst case scenario if I am caught by IR35 and I move to having a limited company would I really be much better off? I think I read somewhere you can only claim about 5% of your expenses!


thanks

Martin

You can claim 5% as expenses. Slightly different. There is a view that IR35 becomes rather more difficult to enforce where the end client is a foreign company. The requirement to be caught is that you would be an employee of the end client but for the implied contract between you and said foreign body. There are points that may make this more difficult. e.g. if the foreign company does not have a branch in the UK. You would be, in my view, well advised to discuss the contract and the implications due to the location of the client and whether travel etc is involved with a specialist such as Bauer and Cottrell or QDOS.

Of course there are also potential questions as to your status in the foreign country depending upon your precises ciscumstances.

[centurian]

Answer to Q1.

No company within IT* will do business with a self-employed bod as there is no offset of risk for said company (regarding tax etc), HMRC could view them as an employee.

They will only deal with a contractor if they are seen to be employed by someone else, either the contractor's own company or an umbrella. This ensures that Tax, NI etc is somebody else's problem, not theirs.

Not sure about Q2. When I've worked for a foreign co I've worked 'over there'...

*99.99% of cases - I'm sure someone will say different...

I was offerred work as a self-employed person by a US based company that really didn't know any different as to how the tax situation worked.

Just assume for one moment that I had gone with them - if HMRC had got funny, they they would have went after the firm - not me (assuming sole trader model) ?