State of the Market

[jamesbrown]

This could be structured so that contractor works directly for overseas client, but that client would be under direction of UK company through intermediary. Technically the client will not be established in the UK and thus work will be outside. The key is to not have such chain as you explained.

I have no idea what you mean by "work will be outside".

There is no offshoring loophole. HMRC reserves the right to pursue any UK entity in the contractual chain. Since there is a UK entity in the contractual chain (you cannot be "under the direction of" without a contractual relationship), the UK client would be pursued for any supply of labour where the circumstances were akin to employment of the worker by the UK client. It doesn't matter whether the worker is onsite at the UK client or WFH, and any number of intermediaries will be looked through.

If it's a fully contracted out supply of services (not labour), fine, but that is incompatible with any worker being "under the direction of" a UK client.

No UK client (with any sense) would try to hide a supply of labour behind offshore intermediaries in the hope of circumventing the new rules, because it simply doesn't work and the taxes/penalties will be transferred to the UK client and possibly to the contractor too if they lied about the circumstances (fraud). There is no offshoring loophole in the legislation. The only way you get to BAU is when there is a supply of labour/workers to an offshore client (not, indirectly, to a UK client) or when you are supporting a fully contracted out service (not a supply of labour/workers) to an overseas client where that service could be sold back to a UK client.

[simes]

Quick question for those on the bench.

Bearing in mind the dire-ness of the market, are people applying equally for Inside as well as Outside IR35 roles?

[eek]

Quick question for those on the bench.

Bearing in mind the dire-ness of the market, are people applying equally for Inside as well as Outside IR35 roles?

No point applying for an inside IR35 role in a location where you can't do a daily commute...

[elsergiovolador]

I have no idea what you mean by "work will be outside".

There is no offshoring loophole. HMRC reserves the right to pursue any UK entity in the contractual chain. Since there is a UK entity in the contractual chain (you cannot be "under the direction of" without a contractual relationship), the UK client would be pursued for any supply of labour where the circumstances were akin to employment of the worker by the UK client. It doesn't matter whether the worker is onsite at the UK client or WFH, and any number of intermediaries will be looked through.

If it's a fully contracted out supply of services (not labour), fine, but that is incompatible with any worker being "under the direction of" a UK client.

No UK client (with any sense) would try to hide a supply of labour behind offshore intermediaries in the hope of circumventing the new rules, because it simply doesn't work and the taxes/penalties will be transferred to the UK client and possibly to the contractor too if they lied about the circumstances (fraud). There is no offshoring loophole in the legislation. The only way you get to BAU is when there is a supply of labour/workers to an offshore client (not, indirectly, to a UK client) or when you are supporting a fully contracted out service (not a supply of labour/workers) to an overseas client where that service could be sold back to a UK client.

How the UK client can ensure offshore supplier doesn't use any UK based contractor to build the project? I didn't mean the supply of labour where offshore company supplies contractor to work directly with the client.
It's more like the UK client says to offshore company "build me this and that" and offshore company builds it.

[jamesbrown]

How the UK client can ensure offshore supplier doesn't use any UK based contractor to build the project? I didn't mean the supply of labour where offshore company supplies contractor to work directly with the client.
It's more like the UK client says to offshore company "build me this and that" and offshore company builds it.

Like I said, a fully contracted out service is absolutely fine. A tiny minority of contractors deliver fully contracted out services. Most UK clients of IT contractors want bums on seats under some degree of direction and control. There is no scenario where bums on seats can be offshored to specifically circumvent the new legislation. It should be blindingly obvious that a UK company can buy a software and support package (for example) from an overseas company that subcontracted a UK PSC and have no knowledge of that contractual chain or role in assessing IR35.

[BlasterBates]

This could be structured so that contractor works directly for overseas client, but that client would be under direction of UK company through intermediary. Technically the client will not be established in the UK and thus work will be outside. The key is to not have such chain as you explained.

If you work for an overseas client then you will still have to declare your earnings, and they will check whether you were actually working overseas or in the UK.

If you are suggesting tax evasion i.e. simply not declaring income, HMRC are not stupid they will send routine enquiries about where you got your assets and where the income is to pay your mortgage. If necessary they'll get a search warrant, appear unannounced at 4 am and confiscate all your devices.

[elsergiovolador]

If you work for an overseas client then you will still have to declare your earnings, and they will check whether you were actually working overseas or in the UK.

If you are suggesting tax evasion i.e. simply not declaring income, HMRC are not stupid they will send routine enquiries about where you got your assets and where the income is to pay your mortgage. If necessary they'll get a search warrant, appear unannounced at 4 am and confiscate all your devices.

This is not what I suggested, only that UK client could have an offshore supplier and contractor an offshore client. Of course contractor would declare earnings as required by law in their CT and SA.

[caffeine man]

Quick question for those on the bench.

Bearing in mind the dire-ness of the market, are people applying equally for Inside as well as Outside IR35 roles?

Yes, I applied for 2 inside. After the extra tax, I would be getting my minimum outside day rate, excluding expenses.


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[simes]

No point applying for an inside IR35 role in a location where you can't do a daily commute...

I 'get' the theory.

It's the practicality I was interested in...

[ladymuck]

Quick question for those on the bench.

Bearing in mind the dire-ness of the market, are people applying equally for Inside as well as Outside IR35 roles?

I haven't had to yet but 'never say never'.