IR35 doesn't apply to US companies?

[Likourinos]

Hi,

I am about to sign a contract with a US company and I phoned an accountant to get some advice regarding IR35 rules.

I was told that IR35 doesn't apply to US companies but my contract could still be checked for IR35 status from the HRMC.

I am bit confused. Does that mean that the US company is not obliged to determine the IR35 status of the contract or does it mean that IR35 is irrelevant in this case?


Thanks

[northernladuk]

Does the US company have a UK presence at all?

Have a look at this

https://forums.contractoruk.com/ir35...-presence.html

And some general links
https://www.qdoscontractor.com/news/...verseas-client
https://uk.markel.com/about-us/news-...nt-is-overseas

I did a search for IR35 USA client in google so there are many articles so try that or mess with search term a little to see if you can find something more specific to your situation.

[WTFH]

What is the relationship between you (the individual) and the US company?
What is your status in terms of UK tax?

[Lance]

IR35 doesn't apply to US companies unless they have a UK presence.

It does apply to any intermediary. So if you're billing them with a UK LTD then it applies. Or if there is an agency involved.

What matters is who makes the determination of whether your engagement is inside, or outside, IR35. If they have a UK presence then they decide. If not then you decide (read the guides to the right to understand what's involved).

[jamesbrown]

Hi,

I am about to sign a contract with a US company and I phoned an accountant to get some advice regarding IR35 rules.

I was told that IR35 doesn't apply to US companies but my contract could still be checked for IR35 status from the HRMC.

I am bit confused. Does that mean that the US company is not obliged to determine the IR35 status of the contract or does it mean that IR35 is irrelevant in this case?


Thanks

If the company is fully overseas with no UK presence, then Chapter 10, Part 2 of ITEPA does not apply ("new IR35"). However, in that case, Chapter 8, Part 2 of ITEPA does still apply ("old IR35"). Bottom line, if they don't have a UK presence, then make sure you have the contract and working practices reviewed for IR35 as normal (normal being pre-April 2021). YourCo remains responsible and liable.

[northernladuk]

Maybe get your fundamental thinking on what IR35 is. IR35 refers to the United Kingdom's anti-avoidance tax legislation designed to tax 'disguised' employment at a rate similar to employment.

That might give you a good start as to who it applies to and why. So it's a UK legislation so why it might not apply to a US client but will if they have a UK presence and why it is still an issue for you even if it doesn't apply to a US based client. Much much more complicated than that but knowing what it is is a start.

[The Spartan]

Hi,

I am about to sign a contract with a US company and I phoned an accountant to get some advice regarding IR35 rules.

I was told that IR35 doesn't apply to US companies but my contract could still be checked for IR35 status from the HRMC.

I am bit confused. Does that mean that the US company is not obliged to determine the IR35 status of the contract or does it mean that IR35 is irrelevant in this case?


Thanks

Same advice as the other posters, I have two contracts with US companies. The first US Company does not have any UK presence so IR35 does not apply, the second US company does have a UK presence and the US parent company does not meet the small companies exemption so IR35 does apply. Who said tax doesn't have to be taxing?

[jamesbrown]

The first US Company does not have any UK presence so IR35 does not apply

Yes, it does (to YourCo).

[Likourinos]

Maybe get your fundamental thinking on what IR35 is. IR35 refers to the United Kingdom's anti-avoidance tax legislation designed to tax 'disguised' employment at a rate similar to employment.

That might give you a good start as to who it applies to and why. So it's a UK legislation so why it might not apply to a US client but will if they have a UK presence and why it is still an issue for you even if it doesn't apply to a US based client. Much much more complicated than that but knowing what it is is a start.

Thanks. The way you worded it makes perfect sense.

[Likourinos]

IR35 doesn't apply to US companies unless they have a UK presence.

It does apply to any intermediary. So if you're billing them with a UK LTD then it applies. Or if there is an agency involved.

What matters is who makes the determination of whether your engagement is inside, or outside, IR35. If they have a UK presence then they decide. If not then you decide (read the guides to the right to understand what's involved).

Got you. So IR35 status has to be checked for every contract no matter what.