Reply to: Tax liability in Sweden & UK IR35 status - UK limited company

[m0n1k3r]

My knowledge of Swedish tax is very limited so you should seek advice from a Swedish tax expert or the Swedish tax office as to whether you would be taxed in that country and viewed as having "permanent residency" for tax purposes there. If you don't step foot in the country and work purely from home in the UK, you may effective dodge this but I'd double check!

I'm in Sweden and know the tax system quite well. If you provide services to a Swedish client from outside Sweden, then it's a purely B2B contract and normal cross-border rules apply from a Swedish POV. For IR35, you yourself in the UK becomes the one to determine IR35 status, which is just like before the IR35 changes started coming in - so no change there either.

Sweden is not UK and UK rules about IR35 status determination has no impact whatsoever on the Swedish client. They have most likely never heard about it, and wouldn't care. They receive an invoice and they pay the invoice. Done.

[Craig@Clarity]

Hi,

I have my own UK limited company and signed a contract with a client (private small company) from Sweden. The contract has no end and will continue until one of the parties decides to terminate it. I'm working for this company full-time and I'm pretty much an employee except that I'm not an official employee. I'll be doing the work from home in the UK and travelling to Sweden isn't required.

I'd like to ask for help in clarifying if there will be any tax liability in Sweden and whether I'm likely to be considered 'inside' for IR35.

I've approached the client in regards to IR35 and have asked to either increase my fees to compensate for the Employer NI that my limited company will have to pay (assuming contract is 'inside' IR35) or to change the relationship at a fundamental level that would move it from 'inside' to 'outside' IR35.

If someone could help clarifying these concerns that would be greatly appreciated. Please let me know if there's any more info required.

Thanks in advance.

My knowledge of Swedish tax is very limited so you should seek advice from a Swedish tax expert or the Swedish tax office as to whether you would be taxed in that country and viewed as having "permanent residency" for tax purposes there. If you don't step foot in the country and work purely from home in the UK, you may effective dodge this but I'd double check!

I get the feeling you know you're effectively a disguised employee of the end client and therefore subject to IR35. The responsibility falls upon you as the PSC to determine your IR35 status and make the necessary deemed salary deductions (PAYE and NI) and pay that over to HMRC. From April 2021, your end client will be exempt from the off-payroll rules which means the determination continues to fall upon you.

[omicron]

Again, thank you all the responses.

I'll save myself £125 and not submit my contract to QDOS for an IR35 review as by reading the contract myself I'm pretty confident of what the result is going to be.

[LondonPM1]

I couldn't give a monkeys at your response. You're absolutely wrong. But that's fine.

Why don’t you set out your point of view. I think you have made a mistake. It’s for you to prove ir35 outside

[jamesbrown]

I couldn't give a monkeys at your response. You're absolutely wrong. But that's fine.

Clueless.

[LondonPM1]

You can’t say “you’ll leave it there” and then bang on for another two paragraphs hoping I won’t respond

If you’re outside IR35, then you’re outside, regardless of client location. If you’re inside, like the OP, then you’re inside, regardless of client location. If yours or the clients non-cooperation were really a viable defence, I think the IR35 industry might’ve realised that by now. You must answer every single question put to you in a credible way. The inability to evidence an outside position is bang-to-rights inside.

I’m afraid this is true. It is for you to prove you are outside ir35 if an investigation happens

Get your contract reviewed by qdos and get ir35 insurance from them. It’s a few hundred max. Mind you no one ever seems to ha e claimed from qdos but that’s different

There are many people who have been at one client for years and have behaved like they are outside ir35. It’s all a grey area but those are the precautions you can take

[Fred Bloggs]

You can’t say “you’ll leave it there” and then bang on for another two paragraphs hoping I won’t respond

If you’re outside IR35, then you’re outside, regardless of client location. If you’re inside, like the OP, then you’re inside, regardless of client location. If yours or the clients non-cooperation were really a viable defence, I think the IR35 industry might’ve realised that by now. You must answer every single question put to you in a credible way. The inability to evidence an outside position is bang-to-rights inside.

I couldn't give a monkeys at your response. You're absolutely wrong. But that's fine.

[jamesbrown]

You can’t say “you’ll leave it there” and then bang on for another two paragraphs hoping I won’t respond

If you’re outside IR35, then you’re outside, regardless of client location. If you’re inside, like the OP, then you’re inside, regardless of client location. If yours or the clients non-cooperation were really a viable defence, I think the IR35 industry might’ve realised that by now. You must answer every single question put to you in a credible way. The inability to evidence an outside position is bang-to-rights inside.

[Fred Bloggs]

Again, jurisdiction is completely irrelevant as it relates to the residency of the client company. It is YourCo under investigation, not ClientCo, including from next April. You also misunderstand where the burden of proof lies. If the client company is not willing to evidence what you’re saying, that is bad for you. You also misunderstand the hassle and stress of an investigation, regardless of the outcome.

Then we'll leave it here. If Hector comes knocking and asks me, I'll show him the order number I have for my overseas client(s). When Hector asks me about IR35 determination I'll tell him I am outside and why I am outside. Hector simply cannot say I am wrong, he has no evidence. He cannot obtain any evidence. I am 100% happy to tell a tribunal the same thing. Client gives me an order number to deliver and invoice against. And that's what I do. There is no IR35 since there is no direction/control, no mutuality of obligation. Substitution? The purchase order is silent. Slam dunk for Bloggs I'm afraid.

[jamesbrown]

And UK legislation stops at the UK border. I don't really understand why anyone would deliberately decide to be in IR35 when HMRC cannot speak to the other contracting party. What evidence do HMRC have to say you are caught when the other contracting party are outside the UK with no UK presence? I certainly would not be so quick to declare myself caught when the UK authorities have no way to gather any evidence.

Again, jurisdiction is completely irrelevant as it relates to the residency of the client company. It is YourCo under investigation, not ClientCo, including from next April. You also misunderstand where the burden of proof lies. If the client company is not willing to evidence what you’re saying, that is bad for you. You also misunderstand the hassle and stress of an investigation, regardless of the outcome.

[Fred Bloggs]

IR35 has nothing to do with where the client is based, rather where the work is done.

And UK legislation stops at the UK border. I don't really understand why anyone would deliberately decide to be in IR35 when HMRC cannot speak to the other contracting party. What evidence do HMRC have to say you are caught when the other contracting party are outside the UK with no UK presence? I certainly would not be so quick to declare myself caught when the UK authorities have no way to gather any evidence.

[jamesbrown]

Why does UK legislation apply to a contract with a company in Sweden? It's a direct B2B arrangement with no UK agency, so why does IR35 apply? Apologies if there's something fundamental I am not understanding.

IR35 has nothing to do with where the client is based, rather where the work is done.

[Fred Bloggs]

Why does UK legislation apply to a contract with a company in Sweden? It's a direct B2B arrangement with no UK agency, so why does IR35 apply? Apologies if there's something fundamental I am not understanding.

[northernladuk]

Get the contract off to QDOS and pay for their review and see what they have to say.

[northernladuk]

The three pillars are Direction and Control, Right of Substitution and Mutuality of Obligation (or lack thereof). You can't sub, sounds like they will just be telling you what to do when and it's a rolling contract with guaranteed hours.

Couple of those like MoO are open for discussion but it could go either way. Issues with all three looks like a pretty clear inside. All the other things are just extras and aren't strong indicators. I know perms who use their own kit so that is not a great flag for example.