Reply to: Offshore client, UK resident, EU Ltd, IR35?

[dogquoteplus]

Nope - the question (taken from HMRC's workshop).

The client must look through the PSC as if it wasn’t there, and consider what
the employment status would be if they were engaging the contractor directly –
would the contractor be an employee or a self-employed worker?

The fact that your PSC is not in the UK doesn't make a single bit of difference here - it just screams Fraud to HMRC.

I know how I would handle this because being blunt it's obvious but as you are trying to be clever it's only right that I let you try to work out the solution.

That's a good quote!
That example makes sense, thanks. Although, based on what people say, HMRC is notorious for trying to bring everyone closer to inside IR35.

[eek]

I guess, the question then becomes, "who does IR35 apply to?".

Nope - the question (taken from HMRC's workshop).

The client must look through the PSC as if it wasn’t there, and consider what
the employment status would be if they were engaging the contractor directly –
would the contractor be an employee or a self-employed worker?

The fact that your PSC is not in the UK doesn't make a single bit of difference here - it just screams Fraud to HMRC.

I know how I would handle this because being blunt it's obvious but as you are trying to be clever it's only right that I let you try to work out the solution.

[dogquoteplus]

That's because it's irrelevant - there still needs to be a determination by the client and as the entire point of IR35 is to ignore intermediary companies add more overseas ones is just going to annoy HMRC.

I guess, the question then becomes, "who does IR35 apply to?".

[eek]

Yes, the company is what you would classify a "global company" really, with HQ in Amsterdam, and an office of circa 200 people in London. The contract just happens to be with the Dutch entity.

Again, I know that using a PSC, in this case the end client makes a status determination, I just can't find anywhere what happens if using a non-UK company for a non-UK contract (if I were hired, I would have been hired in Amsterdam so to say).

That's because it's irrelevant - there still needs to be a determination by the client and as the entire point of IR35 is to ignore intermediary companies add more overseas ones is just going to annoy HMRC.

[dogquoteplus]

Is the UK presence large enough to meet the criteria of the company being a medium or large-sized non-public sector organisation?

If it does them you need a determination (as the client is responsible for the decision regardless of the fact they won't have a clue) if it doesn't then you can make the decision.

Yes, the company is what you would classify a "global company" really, with HQ in Amsterdam, and an office of circa 200 people in London. The contract just happens to be with the Dutch entity.

Again, I know that using a PSC, in this case the end client makes a status determination, I just can't find anywhere what happens if using a non-UK company for a non-UK contract (if I were hired, I would have been hired in Amsterdam so to say).

[eek]

Tax aside, I see that it's unclear whether such a case would have to have an IR35 determination.

Is the UK presence large enough to meet the criteria of the company being a medium or large-sized non-public sector organisation?

If it does them you need a determination (as the client is responsible for the decision regardless of the fact they won't have a clue) if it doesn't then you can make the decision.

[dogquoteplus]

But you are trying to create a contrived structure to gain a tax advantage that isn't required or you use currently.

Tax aside, I see that it's unclear whether such a case would have to have an IR35 determination.

[northernladuk]

It's a generalization, in case the end client deemed that the contract falls outside IR35 for all intends and purposes, despite the company being based offshore.

But you are trying to create a contrived structure to gain a tax advantage that isn't required or you use currently.

[dogquoteplus]

Nope it's accurate given that you are sat in the UK...

It's a generalization, in case the end client deemed that the contract falls outside IR35 for all intends and purposes, despite the company being based offshore.
The question still remains. Would the end client still need to make an IR35 assessment?

Unless you mean, utilizing an EU company as a UK resident to work with EU clients is fraud?

[eek]

That's bold.

Nope it's accurate given that you are sat in the UK and you are earning money from the work are doing in the UK.

[dogquoteplus]

That's fraud

That's bold.

[dogquoteplus]

Very few agents will work with a non UK company. Might be an option for this one client (questionable though) but isn't really feasible longer term.

Agent and client are non-UK. I don't think they care where the PSC is based TBH.

[northernladuk]

Here's the scenario:
I'm UK based, my client is in the EU.
What would happen IR35-wise, if I create an EU based Ltd (say Estonia, or Bulgaria), and use that to work with the end client? I suppose corp tax would be attributed to the country where the Ltd resides, but what about the IR35 status? Would it even apply?

Btw, the client is offshore, but does have a UK presence (office).

Very few agents will work with a non UK company. Might be an option for this one client (questionable though) but isn't really feasible longer term.

[eek]

Corp tax will be paid to the country where the Ltd is registered.
Any declared dividends will have to be taxed in the UK, by the UK bands (7.5%, 32.5% etc).

Will the IR35 status even apply to me as the company director? That's the question.

That's fraud

For a small company's the company's location is based on the location of it's main officer which is you sat in the UK.

This is why if you went to work in Germany, Holland or Switzerland we tell you that the tax needs to be paid where you live.

[dogquoteplus]

Won't make any difference the money arrives in the UK and as you are sat in the UK you will need to pay tax on it.

Corp tax will be paid to the country where the Ltd is registered.
Any declared dividends will have to be taxed in the UK, by the UK bands (7.5%, 32.5% etc).

Will the IR35 status even apply to me as the company director? That's the question.