Sole trader for US company with no UK presence and no agency involved?

[jamesbrown]

The DPNI scheme is essentially an arrangement between you and HMRC on how to pay tax when your employer is located overseas. It is not something that your employer gets involved with. It is just a registration for you to pay EeNI and PAYE directly, something that a UK employer would otherwise do. You can call your local HMRC office and they will register you, but there is a good chance that the person you speak to won’t know what to do and may ask you to pay tax as a sole trader instead (via a SATR), so you’ll need to persist and speak to the right person.

PAYE20100 - PAYE Manual - HMRC internal manual - GOV.UK

Of course, you can also arrange your affairs as a sole trader and, in some respects, that will be simpler (just involves a SATR and payments on account).

[Furby]

Sole trader for US company with no UK presence and no agency involved?

Yes, you can work as a sole trader, but consider the significant risk to your personal assets, especially when dealing with litigious clients. Would I do it with a US client? No, probably not.

You don’t need a visa for an employment contract per se. You need a visa to work in the US, but that applies for all modes of contract.

In terms of UK taxes, you could also register for a DPNI scheme with HMRC, which means you pay EENI and personal income tax via PAYE, but no ERNI.

I would reconsider using a Ltd though. It’s quite hard to envisage working practices for a US client that are inside due to the lack of D&C, but I suppose it’s possible. Either way, YourCo would be responsible, both now and post April 2021.

Firstly, thanks again for this response, really helpful. I’ve been thinking about this a little more. It very much seems that the client wants to hire me essentially as a long term pseudo-employee. I’ll receive employment benefits such as PTO, payment for a coworking space etc. Plus I’ll effectively be treated as an employee by the client (name on website, line manager etc). I find it hard to see how the working practices could ever fall outside IR35. I think this just leaves two options:

1. Sole trader. I do not think it is likely I will run into issues with the client given the type of work and my relationship with them. I’ll still be getting properly covered with PI insurance as best as I can. I can do a SATR and still make use of some expenses. The contract is governed under UK law too.

2. DPNI scheme. I believe this is technically the most ‘correct’ for this kind of situation. However I think this would require the client to agree to this, and potentially treat me differently to other employees? My contract clearly states that I am not an employee so I think that would need to be changed. Also not sure how easily I could expense items, e.g. I will be buying laptop, desk equipment, coworking membership and invoicing the client for the cost.

[jamesbrown]

I thought that having an overseas client meant that IR35 did not apply?

No, there has never been any minimum requirement that the client is based in the U.K. However, post April 2021, the small company provisions apply to a fully overseas supply chain, which means business as usual.

That said, there has always been some complexity w/ IR35 for overseas clients, partly because of the way it interacts with other legislation. For example, the ErNI portion (which is arguably the main reason for IR35) is not recoverable, because it was never due.

[SuperLooper]

It's incredibly easy to be outside IR35 when working remotely for a US client. I would go the Ltd route.

[eek]

I thought that having an overseas client meant that IR35 did not apply?

The rules actually get very complex, very quickly but I wouldn't worry about them here - just set up a limited company.

[IVR247]

I thought that having an overseas client meant that IR35 did not apply?

[Old Greg]

Yes, you can work as a sole trader, but consider the significant risk to your personal assets, especially when dealing with litigious clients. Would I do it with a US client? No, probably not.

You don’t need a visa for an employment contract per se. You need a visa to work in the US, but that applies for all modes of contract.

In terms of UK taxes, you could also register for a DPNI scheme with HMRC, which means you pay EENI and personal income tax via PAYE, but no ERNI.

I would reconsider using a Ltd though. It’s quite hard to envisage working practices for a US client that are inside due to the lack of D&C, but I suppose it’s possible. Either way, YourCo would be responsible, both now and post April 2021.

Agreed. And you would be at pretty low risk of Ir35 investigation IMO. Get IR35 insurance and work via Ltd.

[jamesbrown]

Yes, you can work as a sole trader, but consider the significant risk to your personal assets, especially when dealing with litigious clients. Would I do it with a US client? No, probably not.

You don’t need a visa for an employment contract per se. You need a visa to work in the US, but that applies for all modes of contract.

In terms of UK taxes, you could also register for a DPNI scheme with HMRC, which means you pay EENI and personal income tax via PAYE, but no ERNI.

I would reconsider using a Ltd though. It’s quite hard to envisage working practices for a US client that are inside due to the lack of D&C, but I suppose it’s possible. Either way, YourCo would be responsible, both now and post April 2021.

[Furby]

Hello you knowledgeable bunch,

I have been offered a contract from a US client and I am leaning towards proceeding as a sole trader to make things simpler in regards to IR35. The contract is solid in regards to IR35 (i.e. right to substitution, control of work etc), but I believe the working practices may be weaker. Ultimately I’d be hired as a US employee if it was possible, but I can’t without a US VISA.

Would it make the most sense just to function as a sole trader here with insurance? Calculations online seem to indicate that this wouldn’t be too far from a similar take-home if I was to proceed with a non-IR35 ltd company. I believe working as a sole trader would save the stress of worrying about IR35.

Thank you