Implementation of IR35 - from abroad

[simes]

Had a weird one yesterday which, unless I am missing the obvious might explain the pernicious reach and scaremongering of the IR35 reform rules.

As I currently understand it, IR35 is aimed at UK based companies using contractors within the UK?

Answering a query for a contract for a client based in Belgium, with an agency based in The Netherlands, being paid in Euros, I was told by the agency the client would not entertain UK contractors - because of IR35.

What am I missing here? Why would foreign clients and foreign agencies give a damn about a UK tax law for UK companies and UK based contractors? Just how far is the HMRC reach?

Thanks in advance.

[cojak]

No, IR35 doesn't affect non-UK companies.

Work visas on the other hand...

[jamesbrown]

In principle, an overseas company is responsible for an SDS when there is a UK connection, such as a branch or PE. Equally, the UK connection is liable for any debt, but I suppose there may be some concern that it is transferred internally. Foreign entities are generally very conservative when it comes to foreign (to them) tax authorities.

[simes]

Many thanks both.

Yes, the Visa situation was mentioned and unrelated.

I checked about any UK connection, subsidiary or office I might be called to work from, and nothing.

Deary me!

[jamesbrown]

Many thanks both.

Yes, the Visa situation was mentioned and unrelated.

I checked about any UK connection, subsidiary or office I might be called to work from, and nothing.

Deary me!

If there's no UK connection, they're being a bit silly/ignorant, but you can imagine how it happens, given the complexity of IR35. Unless they're struggling to recruit, why bother?

[northernladuk]

Answering a query for a contract for a client based in Belgium, with an agency based in The Netherlands, being paid in Euros, I was told by the agency the client would not entertain UK contractors - because of IR35.

This is your problem. Agencies rarely know enough about what they do to be able to give anything close to useful information. They are just sales people and are not versed in tax lesislation or internation law.

It is completely reasonable to not want to entertain UK contractors because of the added risk and lack of knowledge so just walk away from it. The actual reason the agent gives you is irrelevant as it's likely to be wrong so I wouldn't spend too much time worrying about it. They don't want to deal with you and that's all you need to know.

They won't know enough about IR35 to know if it applies, they won't know what risks the tax situation brings, they won't know much about international contracts or visas so they just say they don't want UK contractors. They won't be honest and say it's too much bother for us to find out why so they will just throw out some dumb response like this.

You have your answer whether the reasoning behind it is sound or not.

[simes]

This is your problem. Agencies rarely know enough about what they do to be able to give anything close to useful information. They are just sales people and are not versed in tax lesislation or internation law.

It is completely reasonable to not want to entertain UK contractors because of the added risk and lack of knowledge so just walk away from it. The actual reason the agent gives you is irrelevant as it's likely to be wrong so I wouldn't spend too much time worrying about it. They don't want to deal with you and that's all you need to know.

They won't know enough about IR35 to know if it applies, they won't know what risks the tax situation brings, they won't know much about international contracts or visas so they just say they don't want UK contractors. They won't be honest and say it's too much bother for us to find out why so they will just throw out some dumb response like this.

You have your answer whether the reasoning behind it is sound or not.

Walking away from something where we might be be best placed to gently educate would make us delinquent in our professional responsibilities I feel.

When faced with something like this, falling at the first hurdle is hardly in our best long term interests.

But now, and at the third hurdle, I have indeed walked away.

[northernladuk]

Walking away from something where we might be be best placed to gently educate would make us delinquent in our professional responsibilities I feel.

When faced with something like this, falling at the first hurdle is hardly in our best long term interests.

But now, and at the third hurdle, I have indeed walked away.

I would generally agree but contractors educating agents is never going to work. They'll fall back to policies and risk management so it's their legal team you are battling. It also costs them money and time to do it. The chance of a contractor changing an agents risk policy when they can just get someone else to do it is absolutely zero.

Even changing their umbrella PSL because it's crap is nigh on impossible let along risk to intercountry tax and the like.