Brexit/IR35 and Working Abroad

[Lance]

Unfortunately, Yes.
Does IR35 apply if I am working overseas or my client is overseas?.


Ireland are one of the few countries that don't seem to have this "EU Passport holders only" ban on UK contractors at the moment.
But there are very cagey about working with UK contractors now, in practice many are being refused despite perfect qualifications.
It's too risky to work with UK contractors now - I've even heard of people being turned away from Switzerland.


In practise, UK contractors are being blacklisted gradually.

* I should add that companies who do not have a UK presence do not seem to be bothered working with UK contractors.
Due to Brexit, the UK can no longer use the "Mutual Assistance Recovery Directive"

That's because of a treaty in 1922 and latterly, the Good Friday agreement. Ireland and UK are effectively one country with regards to freedom to work and travel. That will never go away.
The rest of the EU will not permit non EU nationals to work without a visa. That has always been the case.
Switzerland is in Schengen so has to have some alignment with EU rules on peoples freedom to work and travel. That's part of the Schengen deal (Norway will be the same).

UK contractors are not being blacklisted. We left the EU and this is the natural consequence. There's no list, black or white.


FOG

[Lance]

Unfortunately, Yes.
Does IR35 apply if I am working overseas or my client is overseas?.

I need to comment on this as well...

You are misinterpreting that link.
It says that if the client is overseas, but also a UK presence then they are responsible for determining your IR35 status.
It also says that "you are still subject to UK tax". This is very misleading. Whilst subject to UK tax by virtue of being resident it doesn't mean you pay UK tax for the work you do overseas.

If I spend 9 months in Germany doing work I pay tax for those earnings in Germany not the UK.
As I'm still UK tax resident then I may well pay UK tax on other earnings but not on the Germany derived income.

Stop misinterpreting poorly written articles and then quoting your interpretation as fact. It is misleading.


EDIT: FOG

[lecyclist]

IMO If you are UK resident and perform your duties overseas, then you are still subject to UK tax, and the engagement is still within IR35 rules.
IMO If you are UK non-resident and perform your services overseas, then the IR35 legislation won’t apply because you are outside the scope of UK tax.

Perhaps close your UK company and become ordinarily resident elsewhere.

FTFY

[jamesbrown]

There is nothing in ITEPA (2) 8 or 10 that excludes a UK taxpayer who works overseas for a company with no UK presence from their responsibility to assess IR35 status, likewise for a UK taxpayer who works in the UK for a fully overseas supply chain.

In both cases, there would be no ErNI due, however.

The basic condition of liability is being a UK taxpayer. There are other basic conditions too, notably being a 5% shareholder.

[Eirikur]

This is what QDOS says:

OVERSEAS ARRANGEMENTS
One of the most common queries we are asked is around what happens if the contractor,
fee-payer, or client are based overseas.
The legislation is frustratingly unclear in most scenarios, so below we outline what we believe
to be the case based on the information available.
IF THE PSC IS BASED AND PERFORMS SERVICES IN
THE UK, CONTRACTED TO AN OVERSEAS CLIENT
VIA AN AGENCY IN THE UK
In this respect, the legislation is relatively clear; “the
liability moves to the next person in the contractual
chain who is in the UK”. In this instance, any liability
would sit with the agency.
If this was slightly reversed in that the agency was
based overseas but the client was in the UK, then the
liability for applying the rules would be that of the
client.
IF THE PSC IS BASED AND PERFORMS SERVICES IN THE
UK, CONTRACTED DIRECTLY TO AN OVERSEAS CLIENT
HMRC have confirmed in the February 2020 review into
the reform’s implementation that the legislation will be
amended to exclude wholly overseas organisations with
no UK presence from having to consider the off-payroll
working rules, meaning that contractors will continue to
determine their own status.

IF THE PSC IS BASED OVERSEAS BUT PERFORMS
SERVICES IN THE UK
The public sector guidance states that “where
an intermediary is outside the UK but the worker
performs services in the UK, fee payers must still
deduct tax”.
IR35 applies to the worker performing the services as
opposed to the PSC itself. Fee payers will therefore
still need to deduct tax where applicable.
IF THE CONTRACTOR PERFORMS SERVICES OVERSEAS
The relevancy of the IR35 rules will depend on your tax
residency as the contractor performing the services.
If you are a UK resident for tax purposes, IR35 may apply
and you will need to consider the contractual chain as
above to determine where the liability will sit.
If you are a non-UK resident for tax purposes, IR35 will
not apply to you.
See Page not found - GOV.UK
statutory-residence-test-srt for more information on tax
residency

[BillHicksRIP]

Any suggestions on the situation I'm in:

UK PSC -> European agent -> Global Outsourcer with a UK presence - European end client. All of the work is done remotely for the Euro end client from the UK.

[jamesbrown]

Any suggestions on the situation I'm in:

UK PSC -> European agent -> Global Outsourcer with a UK presence - European end client. All of the work is done remotely for the Euro end client from the UK.

Global outsourcer is the Fee Payer. First in the chain above the PSC with a UK presence. They would be clueless though. I guess you really need to know your supply chain in this new world...

[Pragmatist]

There is nothing in ITEPA (2) 8 or 10 that excludes a UK taxpayer who works overseas for a company with no UK presence from their responsibility to assess IR35 status, likewise for a UK taxpayer who works in the UK for a fully overseas supply chain.

Good post.

There are no legal impediments to a UK contractor operating in Ireland, but in practise, Irish employers - like Europeans - are spooked by IR35. This has nothing to do with Brexit.
It's the same situation as in the UK - there's nothing to exclude 'Outside IR35' contractors working in the UK, but unfortunately in practice, they are widescale blanket bans - verifiable on the off-payroll website.

It's all fear-driven.
If UK companies won't take the time to understand the rules - why does anyone think a foreign employer would do it?



The following is a good example of 'concerns' Irish employers have about employing UK contractors:

Brexit or no Brexit – why HMRC might be coming after Irish companies
Brexit or no Brexit – why HMRC might be coming after Irish companies | IF Workforce Group

In both cases, there would be no ErNI due, however.

The basic condition of liability is being a UK taxpayer. There are other basic conditions too, notably being a 5% shareholder.

British residency rules are extremely complicated.

[Pragmatist]

All that sounds like an opinion to me. Do you have any evidence for UK contractors "being refused despite perfect qualifications" or "UK contractors are being blacklisted gradually"?

I couldn't imagine anyone publishing something that discriminatory - or anything that could actually be used as evidence. Why would they?

The OP referred to jobs being advertised as "EU nationals only".
I've seen the same thing.

Perhaps ask the OP - he is based in Europe I think?

[Lance]

Any suggestions on the situation I'm in:

UK PSC -> European agent -> Global Outsourcer with a UK presence - European end client. All of the work is done remotely for the Euro end client from the UK.

Yikes. That’s messy.
If I were in your position I’d be doing the same as now, and presuming that in the event of an IR35 problem it’s my problem. That might not not be right but better to be safe.