IR35 - Switching Tax Residency Overseas But Staying With UK Client

[BlasterBates]

Working 3 days in the UK office, the rest 2 days outside of the UK.

How is that different from what you mentioned, i.e working 1 day per week in the UK?

I misunderstood, I'd assumed you were working 1 day a week. There is no difference between 1 day and 3 days. As your Accountant has suggested, you are liable for for IR35. However the original question was about working remotely, which is quite different from your circumstances.

[skysies]

I misunderstood, I'd assumed you were working 1 day a week. There is no difference between 1 day and 3 days. As your Accountant has suggested, you are liable for for IR35. However the original question was about working remotely, which is quite different from your circumstances.

Well, apparently if you have a second client, IR35 ceases to apply.

[BlasterBates]

Well, apparently if you have a second client, IR35 ceases to apply.

The point is you're subject to the IR35 rules and you need to ensure you comply with them.

[jamesbrown]

In principle, you must be chargeable to UK tax for a tax liability under IR35 and chargeable to UK NICs for an NICs liability. These two liabilities are separate. The residency rules are, in turn, completely separate from IR35. However, it is much harder to lose your UK tax residency nowadays.

The number of concurrent contracts is largely irrelevant for IR35, which applies to each contract separately. There is also no relationship between this and tax residency.

In other words, quite a lot of confusion in this thread.

[skysies]

In principle, you must be chargeable to UK tax for a tax liability under IR35 and chargeable to UK NICs for an NICs liability. These two liabilities are separate. The residency rules are, in turn, completely separate from IR35. However, it is much harder to lose your UK tax residency nowadays.

The number of concurrent contracts is largely irrelevant for IR35, which applies to each contract separately. There is also no relationship between this and tax residency.

In other words, quite a lot of confusion in this thread.

I'm not saying that residency and IR35 are related. In my opinion, it doesn't matter whether you work offshore through your LTD for a client based in the UK. Or whether you physically visit him for several days. I think in both cases you can get the non-residency.

However, in both cases it will be very difficult to escape IR35.

[BlasterBates]

I'm not saying that residency and IR35 are related. In my opinion, it doesn't matter whether you work offshore through your LTD for a client based in the UK. Or whether you physically visit him for several days. I think in both cases you can get the non-residency.

However, in both cases it will be very difficult to escape IR35.

That is not true. If you work offshore remotely you are not liable for tax or IR35. When you work remotely you are in an office in a foreign country and that office and the income is subject to the rules of that country.

[skysies]

That is not true. If you work offshore remotely you are not liable for tax or IR35. When you work remotely you are in an office in a foreign country and that office and the income is subject to the rules of that country.

That seems like a dodgy scheme to me. All income generated in the UK should be taxed at source, meaning in the UK. The IR35 would also appy in that case. I just can't see how the UK client will decide to put you outside of IR35, if all their other contractors are on PAYE.

[jamesbrown]

That seems like a dodgy scheme to me. All income generated in the UK should be taxed at source, meaning in the UK. The IR35 would also appy in that case. I just can't see how the UK client will decide to put you outside of IR35, if all their other contractors are on PAYE.

As I said, you’re deeply confused about various things. Why not speak to a specialist, rather than rely on a contractor forum about something this important and comparatively complex? You must be chargeable to UK tax in the first instance (deeming is a charge to UK tax) and whether you are or not is a matter of fact (Statutory Residence Test).

The last point you make is a completely separate one and the the supply chain above you may indeed not be willing to risk that you become chargeable to UK tax at some point during the contract. It is easier for them to ignore outliers like you. FWIW, if you are regularly working from the UK or have other ties to the UK, you may well be resident for UK tax purposes, but that is the first thing to establish.

[BlasterBates]

That seems like a dodgy scheme to me. All income generated in the UK should be taxed at source, meaning in the UK. The IR35 would also appy in that case. I just can't see how the UK client will decide to put you outside of IR35, if all their other contractors are on PAYE.

Not it isn't dodgy, ask your Accountant. If you work remotely in France for a UK company, the French tax authorities will expect you to pay tax in France. You will then not be liable for tax in the UK. Your Accountant has given you advice on the basis of you carrying out the work in the UK. You will still have to declare your income from the UK in the country you are resident, and they will probably ask for proof of you travelling to the UK to do the work. If you do not provide proof they will tax you on the earnings.

The fact is regardless of where you work you will be subject to tax, it is just a question of in which country. If you are not familiar with cross border working you can get into a lot of trouble. You need to be very careful if you decide to work remotely for the same client.

[Jolie]

That seems like a dodgy scheme to me. All income generated in the UK should be taxed at source, meaning in the UK. The IR35 would also appy in that case. I just can't see how the UK client will decide to put you outside of IR35, if all their other contractors are on PAYE.

Not dodgy at all.

If you are not tax resident in the UK and you work in the UK you are still liable for tax, and IR35 would then apply.

If you don't come to the UK to work, but your client is in the UK, then IR35 does not apply. It's simply a business to business supply from an overseas contractor to a UK company.

Non-residency for tax requires you pass a number of tests, one of which is that you must not be in the UK more than 90 days per year, and no more than 30 of those for work purposes. If you are working on your client site for 3 days per week, then you are tax resident and IR35 applies.