Working in England under my Ltd company for a company abroad

[StavrosVon]

Hey all,

Relatively new to the contracting game, been offered the possibility of working remotely from the UK for a country based in a none EU country.

Just wondered what the implications for this would be with IR35 etc. as I cannot find any advice on the matter. I think I should satisfy most of the criteria, i.e control over hours, supplying own equipment, no requirement to be on site etc. Would I be correct its a bit hard to be a 'disguised employee' when your employer is on a different land mass?

Company would pay to my UK bank account in pounds, so then could I just put it through like a normal job?

Apologies if this kind of question has been answered before, I have tried searching fairly exhaustively but all I could find were cases of people moving abroad to work for foreign companies.

Any advice greatly appreciated.

[TykeMerc]

I wouldn't be overly worried on the IR35 front from what you've said.

From the sounds of it you're on the right track treating it like any other contract, the only complication (and it's not much of one) could be VAT. Assuming the client doesn't have a UK or even EU subsidiary that you will be billing then you probably won't have to charge them VAT, but to be sure I'd ring the VAT helpline and ask them directly, in the past I've found them pretty good as answering that sort of question.
Obviously your VAT returns would look a bit different, but it's not tricky.
I suppose if the client turns out to be a bad payer that could be quite a headache, but hopefully you won't have to tackle that one.

[Taxless]

In HMRC's opinion (see below under "What are my tax and NICs liabilities if I work overseas?"), when you work overseas, your tax and NICs liabilities are the same as if you were employed directly by the overseas client.

HM Revenue & Customs:

On that basis, it would appear that if IR35 is in point, it doesn't matter if you are working abroad.

However, if your company required you to work abroad for more than a complete tax year (6 April to following 5 April), then you might qualify as non-UK resident while working abroad and then any salary you draw from the company in that period could be exempt from UK tax, but would still qualify as a deduction for the company for Corporation Tax purposes.

[StavrosVon]

In HMRC's opinion (see below under "What are my tax and NICs liabilities if I work overseas?"), when you work overseas, your tax and NICs liabilities are the same as if you were employed directly by the overseas client.

HM Revenue & Customs:

On that basis, it would appear that if IR35 is in point, it doesn't matter if you are working abroad.

However, if your company required you to work abroad for more than a complete tax year (6 April to following 5 April), then you might qualify as non-UK resident while working abroad and then any salary you draw from the company in that period could be exempt from UK tax, but would still qualify as a deduction for the company for Corporation Tax purposes.

I am not actually working overseas, I am working for an overseas client, but I will never leave the UK and be working from my home office - is this still inline with what you mentioned?

[TykeMerc]

I am not actually working overseas, I am working for an overseas client, but I will never leave the UK and be working from my home office - is this still inline with what you mentioned?

The general consensus is there are 3 mainstay pointers to IR35, admittedly the rules are so woolly nobody can say for an absolute fact whether a contract is in or out of IR35.

Mutuality of Obligation - For the contract period they're obliged to give you work and you're obliged to take it.
Right of Substitution - In theory your company doesn't have to supply 1 specific person to do the work, anyone that's acceptable to the client can be assigned the task. (Personal note this is fairly silly and in practice rarely exercised or exercisable, but it does happen very occasionally)
Direction and Control - Pretty obvious really, client gives tasks to be done by dates, how you go about doing them by those dates is up to you. If the client expects to direct every step and stage then that's bad.

There are a few bits of contract terminology too of course, but that's mostly common sense and a matter of drafting.

Since you've stated up front that you will be doing the work from your own premises using your own kit that's a pretty clear indication that you're working as a business and not an employee with a thin disguise.

[Taxless]

I am not actually working overseas, I am working for an overseas client, but I will never leave the UK and be working from my home office - is this still inline with what you mentioned?

You will be working in the UK for a UK company (your company) and the whereabouts of the compan'y paying client is irrelevant.

The income is therefore not exempted from IR35 simply because of this fact but as TykeMerc says, given your position on this contract as broad view I would agree that IR35 looks unlikely. Can they tell you how to do the work, I doubt it.

On the Mutuality of Obligation point, if they were obliged to offer you more work after an initial contract and you were obliged to acceot that additional work then that would be a bad thing.

[rrobbo]

On the point about paying VAT on work for an overseas client I was told by HMRC that VAT was not applicable for any revenues originating outside the EU even if the work was carried out in the UK.

I'm in a similar position that I provide IT consultancy from the UK for a US based client via a US based recruitment agency that handles all of their temporary/contract worker requirements. The contract I have, or at least the one that my LTD company has, is broadly in line with the contracts given to larger organisations such as IBM and the like and includes provision for substitution. I work from home, provide all equipment (hardware/software/connectivity), determine my own working hours and don't get paid for any extra work that I have to do in excess of a maximum of the 40 paid hours. I also have to provide liability insurance as part of the contract.

On paper at least I'm paid by the hour and would normally do 40 hours. I have to admit that I find any inference that being paid by the hour means that you're tantamount to being an employee as being rather unrealistic. I've worked for 20 years for multiple clients through my own company and large global consultancies and I can't remember when I last saw anyone agree to a fixed price for any piece of work (could just be the particular industry that I work in though).

If I agree with the client that there's a need for face-to-face meetings/discussions then I have to travel in my time and pay all travel and accommodation expenses myself. I also had to pay large sums in legal fees and commit unpaid weeks of work fighting a spurious legal case raised by a large consultancy who would rather not have me playing in their arena. If these don't demonstrate risk then I don't know what does!!

There's no commitment on either side but there's potential that the contract could run for up to 2 years, which would see the end of a major implementation for them (which is why they need temporary additional staff). When they raise additional pieces of work and offer them to me the e-mails invariably say "if you're still interested", which hopefully infers a lack of mutuality of obligation. For much of the work I create the designs and then carry out the implementations within timescales that I define. When I wholy originate a piece of documentation I have it branded with my own Ltd Company (I also maintain my own corporate website).

My main point here though is that even though my client is based outside of the UK I still have every reason to believe that IR35 could come breathing down my neck and I try to keep on top of things as if they were UK based. I also take out IR35 insurance just to be on the safe side as the reality of IR35 and its interpretation by individual tax inspectors are not necessarily one and the same.