Client in Europe but work carried out in UK - is IR35 April 2020 relevant?

[ChimpMaster]

Not sure if this has been covered here, but in relation to the IR35 April 2020 changes - what if:

- the client is based in Europe, but contractor carries out majority (80%) of the work in UK from my home office.
- payments are made in £ to my UK Ltd Co.
- all other factors being the usual like: one client, invoice raised and paid monthly etc.

My thoughts are that the client is non-UK and hence not liable to provide a Status determination. So long as my working practises are outside IR35, then I declare myself as such.

This is for a new contract I am looking at, so just trying to figure out how April 2020 might impact it.

[jamesbrown]

Draft legislation suggests that a wholly overseas supply chain will be responsible and liable, otherwise the closest company to your PSC that is UK resident. The public sector legislation introduced the concept of deemed residency and that still applies in the draft legislation. Enforceable? No, hardly. Might it change? Yes, very possibly when the final legislation is enacted. Some commentators assume BAU in the scenario you mention, but the draft legislation suggests otherwise, so far.

[jamesbrown]

Examples of my preferred interpretation:

IR35 - What happens when there are overseas aspects? | RSM UK

Other interpretations are available, but I disagree with them.

[simes]

This is currently exactly my situation too Chimp.

I am told, and I believe, that HMRC's jurisdiction ends at the borders. They can't dictate what foreign clients do. Therefore, am Outside.

[ChimpMaster]

This is currently exactly my situation too Chimp.

I am told, and I believe, that HMRC's jurisdiction ends at the borders. They can't dictate what foreign clients do. Therefore, am Outside.

Do you have an agency in between? i.e. might they be liable to provide the SDS to you?

[jamesbrown]

This is currently exactly my situation too Chimp.

I am told, and I believe, that HMRC's jurisdiction ends at the borders. They can't dictate what foreign clients do. Therefore, am Outside.

Whether your working practices are inside or outside is a matter of fact, rather than your opinion, but I understand what you mean. The problem with the draft legislation is that, in making an overseas company responsible and liable (they do), and without allowing for a transfer of liability to the PSC (they don't), except in cases of fraud, they have essentially off-shored the risk. Practically speaking, they will not be able to enforce this on a deemed resident company or to collect from any company that is actually UK resident. Then again, we're talking about a tiny fraction of the market and a low-risk fraction at that. It would be quite hard to paint yourself inside IR35 on a contract delivered remotely to an overseas client, but not impossible.

We'll see if the enacted legislation clarifies this. It is precisely the sort of small clarification that might be expected. If they do clarify, it will probably be to indicate that a wholly overseas supply chain follows the small companies route.

[jamesbrown]

Do you have an agency in between? i.e. might they be liable to provide the SDS to you?

Right, if there is any UK entity in the supply chain, other than the PSC, then the responsibility and liability rests there. The draft legislation is clear about that much.

[simes]

Do you have an agency in between? i.e. might they be liable to provide the SDS to you?

I do. Based in NL.

[simes]

It is precisely the sort of small clarification that might be expected. If they do clarify, it will probably be to indicate that a wholly overseas supply chain follows the small companies route.

Many thanks for this.

As for the quoted bit... 'The HMRC to clarify anything' must surely be a contradiction in terms...!

[jamesbrown]

Many thanks for this.

As for the quoted bit... 'The HMRC to clarify anything' must surely be a contradiction in terms...!

Well, yes. So, they might not. FWIW, my money is on them not clarifying, but if they were to make small changes, this would be one to look for.