Reply to: Residence and IR35

Problem with your theory

What matters is the relationship between the contractor and the client as his hypothetical employer surely?

If the contractor wouldn't be taxable as an employee by that client, then IR35 doesn't apply. It says as much in the legislation.

Re: IR35, Client & residence

You may have a small problem with your theory.....the income is generated through a UK registered limited company with the income being earned in the UK.

IR35, Client & residence

HB - try looking at
www.inlandrevenue.gov.uk/manuals/epmanual/EP8075/46_0012_ep8095.htm
That confirms you have to deduct PAYE/NIC from payments until you know what the situation is.

What it says in the Double Tax Agreement between the workers country of residence and the UK may also matter especially if it means that the employment income should be taxed in that other country. If that's the case then it's my understanding that IR35 doesn't apply. That's because IR35 doesn't apply to situations where a contractor wouldn't have been taxed if actually an employee of the client.

Re: Wireless World

Quartz? Quartz?

Corrundum, galena, coal, yes, but Quartz?

Should be drummed out of the crystal radio society!

Re: Wireless World

> valves

Valves? - goddam new fangled rubbish - will never catch on - all them accumulators to power 'em up - rubbish. I'm sticking to my bit of quartz and cats-whisker - I can get 2LO easy at night and I only use a 600ft aerial

Re: Wireless World

Just wait a while, we'll be onto thermionic valves soon, for that reassuring warm glow....

Re: Wireless World

This is interesting - 2 guys reminiscing about things even I can't remember - will have to point Fiddle to this thread - he's sure to have some input.

Re: Wireless World

Well, it's called Electronics World these days and a good deal thinner than it used to be, unlike me.

I used to find the Electronics & Power mag that the IEE produced reasonably interesting, but that was revised away a long time ago.

The latest epics leave me cold.

Programming by remote control must have been fun.

The dear dead days beyond recall of batch processing decks of cards.

Wireless World

I'll read Wireless World like I have for the last 30 odd years.

Wireless World. Is that still going? I remember reading it at school in the 1960 when everyone still soldered individual transistors to PCBs.

Those were the days. The nearest we got to a computer was punching holes in cards (individually with a stylus) and sending them off in the post to a computer somewhere for the printout to be returned in a week or so saying "syntax error" or whatever.

Re: The IEE

A fine example of grade inflation.

At one time, the academic requirements were a degree.

Or Part II of the Council of Engineering Institutions Examination.

Then it became a 2.2 or above (1981).

Now, apparently, it's an MSc.

Next it will be a PhD.

Then the academics will have achieved their object & excluded everyone who isn't an academic.

Magic.

Can't have anyone who actually works for a living in such an august body.

Will I miss the fine selection of generally incomprehensible magazines?

No. I'll read Wireless World like I have for the last 30 odd years.

But hey! I'll try not to think of what else I could have spent all those membership fees on.

The IEE

I'm now MIEE for what that's worth. Which isn't much, so far as I can tell.

I think the value of being a member of a recognised professional institution lies in enabling third parties to establish that you are a professional person. Traditionally in IT experience and practically demonstrated expertise have been valued, and qualifications and membership of professional bodies have been seen as unnecessary. But there are situations where someone who is not in a position to easily evaluate an IT worker’s work, or to take up references, will be seeking confirmation that they are a professional.

Such situations do occur from time to time and the Bar Council is an example in point. In deciding whether to grant a BarDIRECT licence the Bar Council is concerned, the Bar being a referral profession, that the person who would be authorised to instruct Counsel is a person who provides skilled and specialist services, is competent in an identifiable area of expertise or experience, and “is possessed of the necessary skills to obtain and prepare information and to organise papers and information sufficiently to enable the barrister to fulfil his duties”. Of course it is possible to be all of these things without being a member of a professional body but membership of an approved professional body is taken by the Bar Council as a convenient means of establishing this.

In order to become a professional member of the IEE it used to be the case that you had to meet the requirements for registration as a chartered engineer which were essentially a Master’s degree in engineering from a university the content of whose course had been approved by the Engineering Council, and a number of years of formally supervised experience. Because particular academic qualifications and formal traineeships are not generally required or undertaken in IT, the result was that IT professionals were generally unable to jump through the hoops necessary for membership of the IEE (or, for that mater, the BCS). That has changed recently so that now the IEE admits to membership anyone who can demonstrate that they are engaged professionally in engineering (which is taken to include IT) whether or not they can get through the additional hoops required for CEng.

The IEE is currently involved in merger talks with the Institution of Mechanical Engineers. Interestingly the IMechE only admits to professional membership those who can pass through the CEng “hoops”. As part of the process of forming a combined Institution of Engineers (of whatever it is decided to call the merged body) the criteria for membership will need to be decided upon. The result may be somewhere between the IEE’s current “open doors” policy and the IMechE’s much more restrictive policy. If so it is probably a good time to join the IEE before the drawbridge is raised.

tax and residence

Why is IR35 a 'Personal Tax Liability' thing if it applies to persons not tax resident in the UK. If they can make it apply to non-domiciled people does that mean it's a company liability now rather than personal????

Long before IR35 was a twinkle in the Paymaster General's eye, UK income tax already applied to non-residents on income arising in the UK (subject to various exceptions under double taxation treaties where e.g. work in the UK is for a temporaray period).

The advantage of being non-domiciled in the UK is that you can be permanently resident here but are only taxed on income arising in the UK or income remitted to the UK. So for example, the profits of any business Mr Al Fayed may have outside the UK are (providing he does not bring the money into the UK) not subject to UK tax but his income from Harrods is still subject to UK tax.

John Antell
www.john.antell.name

Re: IR35

Yes, I am working through a UK registered company. I am coming to the end of a contract of under sixth months in the UK.

According to the first person who answered this would make be liable for UK tax, but not National Insurance contributions under IR35. If this is is true and the customer doesn't extend then I suppose I should make sure I leave the country before my six months are up so that I can keep an extra ten thousand pounds or so.

If the customer wants to extend I should either make sure I have an IR35-proof contract or ask them if I can do the work offshore.

If there is no tax saving then I guess the decision depends on whether I intend to work abroad - it sounds as though if I were to become resident and ordinarily resident then I would be exposed to paying UK taxes on 95% of turnover + possible foreign tax as well.

Does it make a difference if I use a non-British company to work through? Is there somewhere online that lists all the details of IR35/residence?

These rules are too confusing - I don't know if my contract is IR35 proof or not, but I want to know what my options are if it isn't.

Re: IR35

JS....valid point, however would be caught in the first instance as working through a UK registered company, which is generating income in the UK.

Re: IR35

Why is IR35 a 'Personal Tax Liability' thing if it applies to persons not tax resident in the UK. If they can make it apply to non-domiciled people does that mean it's a company liability now rather than personal????