IR35 and not being tax-resident in the UK

[zerosum]

Just trying to clarify my understanding of one aspect of IR35 liability.

As I’ve mentioned elsewhere, I’ve been non tax-resident in the UK for over 3 full tax years now, though I still have a UkCo (with one other Uk-based director) for the sake of contracting with UK-based clients.

My understanding; if I’m investigated for a contract that occurred before I left the UK, then all the usual rules apply.

But what I’m less clear on is what might happen if I’m investigated for a contract after becoming tax-resident abroad. Suppose it gets to the point where the agency tries to claw back cash from me. Would my non tax-residence help (in the sense that PAYE ought not to apply), or is it a complete red herring (in the sense that the role is more important than the circumstances of the individual).

[ladymuck]

Are you assuming you're picking up outside IR35 contracts?

If it's an inside assessed role then no agency will let you put the billing through your LtdCo - they will insist on their payroll or an umbrella.

[jamesbrown]

Despite being nominally a company liability, IR35 cannot apply unless the individual in question has a charge to UK tax. The latter is a factual question but, if you are non-UK tax resident and the work is being performed outside the UK, then there is no charge to UK tax and IR35 cannot apply, regardless of whether you are operating through a UK PSC. Likewise all other UK tax legislation (although there are some "retrospective" rules on return, such as on dividends and capital gains received from profits derived in the UK and gains made on UK assets while overseas). The only potentially grey area that I can envisage is when (some) work is performed in the UK that is not merely incidental to the delivery of the contract, so you need to be very careful to not perform any work while physically in the UK.

Regarding what an agency may try to do, who knows and that is a largely separate question that depends on the contractual agreement.

[zerosum]

Are you assuming you're picking up outside IR35 contracts?

Yes, I should have clarified this point.

Have had some discussions about inside-IR35 roles, but when I introduce the topic of not being UK-resident, needing to apply an NT tax code, and so on, discussions tend to dry up at that point.

[zerosum]

The only potentially grey area that I can envisage is when (some) work is performed in the UK that is not merely incidental to the delivery of the contract, so you need to be very careful to not perform any work while physically in the UK.

Onboardings, periodic meet-and-greets, answering a few emails while visiting family in the UK...the line between incidental and not is not as clear as it could be. What would be a worst-case upshot here in your opinion?

[jamesbrown]

Onboardings, periodic meet-and-greets, answering a few emails while visiting family in the UK...the line between incidental and not is not as clear as it could be. What would be a worst-case upshot here in your opinion?

The only clear line is the statutory residence test, so don’t cross that with your family ties, UK financial interests and visits etc. In terms of those other things, they sound incidental to me, but I would certainly avoid any “productive” work in the UK.

[ladymuck]

Onboardings, periodic meet-and-greets, answering a few emails while visiting family in the UK...the line between incidental and not is not as clear as it could be. What would be a worst-case upshot here in your opinion?

Think about it in the same way as if you took your laptop on holiday with you and checked emails a couple of times while sipping a daiquiri. You're certainly not tax resident in Bora Bora and the amount of work being done is incidental.

Similarly, you might be passing through Melbourne on holiday and happen to know that a client representative is based there - you drop them a note to see if they'd like to meet for a coffee as you've spoken to them a lot on the phone / over email and it would be nice to meet F2F. HWMBO did exactly that in pre-pandemic times. Again, incidental.

It becomes trickier when you have long-established connections to a country (e.g. you were born and raised in the UK, all your family are still here, you might still own property, regularly return to visit friends, etc). This is where you need to be very careful about ensuring the work done in country is very incidental.

[SussexSeagull]

Are there any umbrellas who could cope with this scenario?

[jamesbrown]

Are there any umbrellas who could cope with this scenario?

UK umbrellas? Doubtful. I'm sure they could apply an NT tax code, in principle, but they would probably want to avoid this scenario in practice. You could ask lucyclarityumbrella, for example.

[eek]

Yes, I should have clarified this point.

Have had some discussions about inside-IR35 roles, but when I introduce the topic of not being UK-resident, needing to apply an NT tax code, and so on, discussions tend to dry up at that point.

Hardly surprising because you instantly move into the top complex, move on to the next candidate box

now someone like 6cats will be able to deal with the complexities of cross border wages but most (all) agents will have run away well before then.