UK full time employee side contract for US company

[condent]

I am a full time employee of a UK university. I am a higher rate tax payer.

I have an opportunity to do some consulting for a small US company with no UK presence.

This would be the only customer I would have, but I would be contracting based on my research experience and skills.

How likely is it this could fall outside of IR35? Does the fact I maintain full time PAYE employment in the UK have any bearing? As long as the contract is written to be IR35 compliant would it be OK if I go and visit the company a few times.

[northernladuk]

First thing to do is search the forums for contracting in the US threads. There have been an awful lot of them so might not get the best answer because people don't want to go over it all again.

Go to google and type in something like 'US contract site:forums.contractoruk.com'

You can obviously use different keywords but you can also change the forum section you want to search in. If you are getting too much noise from the general chit chat in General you can search the business and/or accounting sections by using forums.contractoruk.com/accounting-legal/ and forums.contractoruk.com/business-contracts/ to search each of those specifically.

I'm sure you'll find the answer as it's a pretty straightfoward situation.

[jamesbrown]

How likely is it this could fall outside of IR35?

Extremely. However, bear in mind that it would be on YourCo to make the assessment.

Does the fact I maintain full time PAYE employment in the UK have any bearing?

No. IR35 (the intermediaries legislation) applies to each contract separately where the work is intermediated by a company or partnership or person. What matters is the working practices.

Of course, it might be easier to operate this work as a sole trader, providing you accept the personal risks of doing so (I wouldn't, but I mention it for completeness). Another option would be to use an umbrella and salary sacrifice to your pension. Opening a company for a side hustle is going to be more effort than you expect. You will have all sorts of responsibilities and will need an accountant.

As long as the contract is written to be IR35 compliant would it be OK if I go and visit the company a few times.

Whether you visit this company is neither here nor there. What matters for IR35 is the working practices. If you do visit, bear in mind that you cannot do productive work in the US on a visa waiver or B visa.

[condent]

Thanks very much. Should have mentioned I have US citizenship so there are no visa issues with work visits. As a citizen I'm also a us taxpayer which may make that limited company route more difficult.

[jamesbrown]

Thanks very much. Should have mentioned I have US citizenship so there are no visa issues with work visits. As a citizen I'm also a us taxpayer which may make that limited company route more difficult.

Ah, right, that makes things much more difficult, yes (w/r to IRS filings). The level of additional difficulty will depend on how you deal with it, but the simplest approach would be to file as a disregarded entity (essentially, self-employed treatment). Even then, there are a number of differences in tax reliefs to be aware of, such as pensions. Being a US citizen is a world of hurt when you own a business overseas, absent good advice w/r to cross-border tax issues.

[condent]

Yes I would do disregarded entity. I guess the dividend income is in a different FTC basket to my other salary, but I guess UK tax on dividends is still higher than US federal income tax so should still have nothing to pay? Not sure though, as the salary income will put me in a higher us tax band (even if using FEIE)

[jamesbrown]

Yes I would do disregarded entity. I guess the dividend income is in a different FTC basket to my other salary, but I guess UK tax on dividends is still higher than US federal income tax so should still have nothing to pay? Not sure though, as the salary income will put me in a higher us tax band (even if using FEIE)

Probably. I'm not sure how the Biden reforms (in their eventual state) will impact things. On the specifics, it would be sensible to get some cross-border tax advice as this is not straightforward - you will find that it's super expensive (think legal fees, rather than accountancy fees) but here be dragons, so it's worthwhile. Filing as a disregarded entity is almost certainly the way to go, though (you definitely want to avoid things like subpart F income).

[jamesbrown]

Also bear in mind that ordinary PI insurance will have an exclusion for North America, so you'll need extra insurance if the jurisdiction and/or governing law is that of a US state (try Kingsbridge or Randell Dorling via IPSE - it's some multiple of ordinary PI, but the cheapest you'll find).

[condent]

Thanks again. I'm thinking from looking at it more that probably the limited company is not worth it unless the hours increased and I am better off using a service company and do PAYE + pension contributions which will be much simpler all round.

[jamesbrown]

Thanks again. I'm thinking from looking at it more that probably the limited company is not worth it unless the hours increased and I am better off using a service company and do PAYE + pension contributions which will be much simpler all round.

That's probably the way I'd go unless it were a substantial piece of work over an extended period. I guess you're already familiar with the differences in the taxation of pensions here versus in the US (i.e., the relief you get here on pension contributions may not extend to the US).