Reply to: "Inside IR35" but I am not UK tax-resident

[BlasterBates]

There are countries which will issue you with a tax residence certificate based on very few days indeed. But if you spent e.g. 60 days in that tax base and 150 days in a country with an aggressive tax authority, it's debatable how impressed they'll be. They'll want to know about centre of interests.

Sure it might not be enough, but it often is. The OP has been in Poland for 2 years. All he needs is a confirmation from the client that he's remote and his last tax return from Poland and it should suffice.

[zerosum]

Sure you can provide all sorts of proof, but a simple confirmation from a foreign tax authority is worth an encyclopedia of alternative proof. If HMRC asks for proof and you provide none they'll simply keep the money and force you to take them to court. Of course you'll win but why make your life complicated.

There are countries which will issue you with a tax residence certificate based on very few days indeed. But if you spent e.g. 60 days in that tax base and 150 days in a country with an aggressive tax authority, it's debatable how impressed they'll be. They'll want to know about centre of interests.

[zerosum]

You sure it’s possible to not be tax resident anywhere?
I am pretty sure that’s not true.

Of course it's possible, the problem is that it invites a nightmare of proof. Most HNWIs will simply go the route of taking residence in a zero-tax regime, or one that doesn't tax income from outside the country. Even in the absence of tax residence, most countries tax work you perform on their territory, regardless of source.

I think there's a failure to understand in this thread that what HMRC seeks to do is determine if you are tax-resident in the UK. To this end there is the statutory residence test. If you fail (or pass, according to your point of view) one of the automatic tests, nothing else needs to be evaluated and you are not tax resident. There is therefore no provision for clawing tax back. The extent to which they are then going to spend time and valuable resources figuring out where you *were* resident and where you should be paying taxes is highly debatable.

Where I think the confusion comes in is if you *are* resident in the UK, *and* resident somewhere else. This is altogether more of a pickle and where BlasterBates seems to be coming from in his comments, based on the particular circumstances he experienced (but which do not apply in all cases). For example, in this situation, there is a tiebreaker provision in most DTAs that you can be taxed on the basis of your citizenship, if all other proof you supply is inconclusive. In this situation I agree, tax residency certificates and anything else you can possibly think of are a good idea.

[BlasterBates]

That makes sense. But they cannot demand a certificate of tax residence elsewhere, even though it would make things easier. It is possible -- even if probably inadvisable -- to be not tax resident anywhere. If you haven't spent a single day in the UK, and have evidence to that effect, the rest of the SRT does not even need to be looked at and HMRC could not legitimately withhold a refund. Otherwise why even bother postulating automatic tests and naming them that way.

Sure you can provide all sorts of proof, but a simple confirmation from a foreign tax authority is worth an encyclopedia of alternative proof. If HMRC asks for proof and you provide none they'll simply keep the money and force you to take them to court. Of course you'll win but why make your life complicated.

[Lance]

That makes sense. But they cannot demand a certificate of tax residence elsewhere, even though it would make things easier. It is possible -- even if probably inadvisable -- to be not tax resident anywhere. If you haven't spent a single day in the UK, and have evidence to that effect, the rest of the SRT does not even need to be looked at and HMRC could not legitimately withhold a refund. Otherwise why even bother postulating automatic tests and naming them that way.

You sure it’s possible to not be tax resident anywhere?
I am pretty sure that’s not true.

And if it was, and the OP could prove that then HMRC would take the tax anyway as there’s no double tax treaty with ‘nowhere’.

The agency aren’t gonna be interested. They’ll just handle like any normal use case or they’ll bin the contract. It’s not worth their while ballsing around for one pain in the arse contractor.

[zerosum]

Obvously if the agency simply pays the him without deducting National Insurance and he doesn't have a tax code then this is no problem, no tax to pay, no correspondence with the Inland Revenue is necessary. Unfortunately the agency might feel obliged to do this so he will end up registered for tax by the agency simply to get the contract. They won't simply refund it without some sort of basic proof of non-residency.

That makes sense. But they cannot demand a certificate of tax residence elsewhere, even though it would make things easier. It is possible -- even if probably inadvisable -- to be not tax resident anywhere. If you haven't spent a single day in the UK, and have evidence to that effect, the rest of the SRT does not even need to be looked at and HMRC could not legitimately withhold a refund. Otherwise why even bother postulating automatic tests and naming them that way.

[BlasterBates]

This I can understand, because you then need to evaluate the more intricate tests and have a burden of proof. But 0 days in the UK, and able to categorically prove that? That's it. KPMG flowchart summarises it nicely, especially if there is a test early on that means the rest don't need to be evaluated.
https://assets.kpmg/content/dam/kpmg...-flowchart.pdf

Obvously if the agency simply pays the him without deducting National Insurance and he doesn't have a tax code then this is no problem, no tax to pay, no correspondence with the Inland Revenue is necessary. Unfortunately the agency might feel obliged to do this so he will end up registered for tax by the agency simply to get the contract. They won't simply refund it without some sort of basic proof of non-residency.

[zerosum]

When I was working in one country and resident in another they occasionally required the tax return from the other country, and yes it took over a year before I could send it to them. They will wait.

This I can understand, because you then need to evaluate the more intricate tests and have a burden of proof. But 0 days in the UK, and able to categorically prove that? That's it. KPMG flowchart summarises it nicely, especially if there is a test early on that means the rest don't need to be evaluated.
https://assets.kpmg/content/dam/kpmg...-flowchart.pdf

[BlasterBates]

If you mark that you were not resident on your SA, and can truthfully assert on in your SA109 that you spent <16 days in the UK, you cannot be tax-resident. The SRT categorically excludes this possibility. So for example, you cannot be a digital nomad 100% of the time and elect the UK (because of citizenship and convenience) as the place you pay tax. Or not without committing fraud. It becomes more muddy if you are spending some time in the UK and have some ties; on this basis, someone could legitimately (but mistakenly) consider themselves tax-resident there. The 'home' test is a particular minefield.

Not all countries will provide tax certificates or not in a timely manner. Again, if you can prove your non-presence in the UK for the requisite number of days, HMRC don't have a case. The SRT works to both parties' advantage.

When I was working in one country and resident in another they occasionally required the tax return from the other country, and yes it took over a year before I could send it to them. They will wait.

[zerosum]

To prove you are resident elsewhere the most important document is the one showing you are taxed on worldwide income in that country, without that they probably won't accept you're resident there. Of course you need the extra proof as well. If you have no proof of being resident anywhere else then because your job is in the UK they will simply assume you are UK resident.

If you mark that you were not resident on your SA, and can truthfully assert on in your SA109 that you spent <16 days in the UK, you cannot be tax-resident. The SRT categorically excludes this possibility. So for example, you cannot be a digital nomad 100% of the time and elect the UK (because of citizenship and convenience) as the place you pay tax. Or not without committing fraud. It becomes more muddy if you are spending some time in the UK and have some ties; on this basis, someone could legitimately (but mistakenly) consider themselves tax-resident there. The 'home' test is a particular minefield.

Not all countries will provide tax certificates or not in a timely manner. Again, if you can prove your non-presence in the UK for the requisite number of days, HMRC don't have a case. The SRT works to both parties' advantage.

[BlasterBates]

Not sure where the Polish authorities come in
.

To prove you are resident elsewhere the most important document is the one showing you are taxed on worldwide income in that country, without that they probably won't accept you're resident there. Of course you need the extra proof as well. If you have no proof of being resident anywhere else then because your job is in the UK they will simply assume you are UK resident.

[zerosum]

As proof of being in Poland typically they require confirmation from the Polish authorities that you're resident, a rental agreement, utility bills, medical bills, health insurance, and plane tickets if you do visit the UK. An excellent one is visits to the local cash dispenser. Perhaps draw money weekly or every fortnight mid-week.

My accountant suggested to me that if you're claiming non-residency e.g. on the basis of one of the automatic overseas tests (like spending less than 16 days), it's typically up to you to prove it. For example, the proofs that you mentioned. The most iron-clad is if you can show some kind of relevant transaction outside the UK for 350 days (or fewer, depending on how recently you were tax-resident in the UK), whereby none of the more complex home/job tests even apply.

Not sure where the Polish authorities come in; after all, the only point is whether you were in the UK. Presence and the SRT are matters of fact. Unless you're requesting split-year treatment, or there is a double-tax situation to be resolved, it's not HMRC's job to police your presence elsewhere, or to ensure you are paying the correct social insurance in Luxembourg/Poland as the case might be. So for example if you were all over the place (certainly, a possible can of worms in itself) that is not their problem.

[BlasterBates]

I once paid UK NI when not being a resident to avoid social insurance in Luxembourg and HMRC wrote to me much later to offer to pay it back as I clearly wasn't a resident. I think this can be sorted out with HMRC and your agency. In your case you will be working for a UK company and therefore I suspect they will need more proof and it might take some time sort this out but if you do pay any National Insurance in the meantime it should be refunded. The reason why they wrote to me was because they noticed I'd paid NI but no tax. This raised a flag in their system and therefore they'd assumed I'd overpaid. The same thing should happen if the agency deduct NI but during the tax year you have no income, this should automatically lead to them paying you a refund.

I would advise first of all trying persuade the agency to register you as non-resident and if not employ an accountant to help you out.

As proof of being in Poland typically they require confirmation from your employer that you work remotely, confirmation from the Polish authorities that you're resident, a rental agreement, utility bills, medical bills, health insurance, and plane tickets if you do visit the UK. An excellent one is visits to the local cash dispenser. Perhaps draw money weekly or every fortnight mid-week. I would begin with a confirmation from the local Polish authorities and one from your client. That should probably suffice to begin with when trying to establish non-residency.

[jamesbrown]

I think you've basically summarised the issue yourself.

Yes, IR35 is, practically speaking, only applicable to UK taxpayers.

At the same time, the responsibility for administering IR35 from April 2021 onwards is with the fee payer and, ultimately, with the client in some circumstances.

Assuming the fee payer is willing to work with you, then you will, indeed, get your NT tax code and share that with the fee payer. Still, you will effectively pay the Employer's NI and perhaps the Apprenticeship Levy too (in other words, those taxes/levies are coming out of the overall rate, whether you like it or not).

Overall, I would think you'd be better off with a Polish payroll provider or umbrella, assuming the fee payer is willing to work with them. You could have a chat with Sue B..

[NotAllThere]

Forget about using your company. If you had an existing relationship with them, they might do it, otherwise too much risk. Rather than worrying about the ifs buts and whens, tell them straight up that your a PL resident, and see what they say. Once the agency put you through and tell you how they think they'll pay you, then come back here and ask, if you don't like what they suggest.

Your first goal should be getting the offer from the client. Worry about how to get paid later - when it's become partially their problem.