Reply to: Paying my own ers NI? Sanity check.

[lucyclarityumbrella]

Thanks again cukkers, I have spoken to Lucy at Clarity. She was hugely helpful and clearly knows her stuff.

Thanks Platypus lovely to speak with you and you are more than welcome

[Platypus]

but speak to Lucy at Clarity and see if she can help

Sounds like you have it covered then. My advice is pretty much the same, though - find a UK umbrella. There is no opportunity to "save" on any payroll tax (including ErNI) if the supply chain is working properly - that's the point.

Thanks again cukkers, I have spoken to Lucy at Clarity. She was hugely helpful and clearly knows her stuff.

[jamesbrown]

I've updated my original post. I'd welcome any additional comments you have. Plus I'm getting additional professional advice. Thanks again!

Sounds like you have it covered then. My advice is pretty much the same, though - find a UK umbrella. There is no opportunity to "save" on any payroll tax (including ErNI) if the supply chain is working properly - that's the point.

[Platypus]

You might want to correct your OP then.

I've updated my original post. I'd welcome any additional comments you have. Plus I'm getting additional professional advice. Thanks again!

[jamesbrown]

(a) Blimey!
(b) Thanks a million for your advice! It's really appreciated

FWIW, my accountant is going down the "operating a deemed payment yourself" route on the basis that the supply chain is entirely overseas, as in MYCO -> OVERSEAS INTERMEDIARY -> OVERSEAS END CLIENT which in turn is owned by OVERSEAS HOLDING COMPANY

The UK-present part of client is not the end client, it's another separate company who are also wholly owned by OVERSEAS HOLDING COMPANY, therefore UKCO is not at the top of the supply chain or even in the supply chain, which is why (to me) it beggars belief that they could even be involved!

You might want to correct your OP then. You're now saying that the end client doesn't have a UK PE, rather some other company that owns the end client has a UK PE. You'd have to look into whether the foreign end client has a UK PE because you don't seem very sure (given that it has changed between the OP and this post).

Either way, I wouldn't trust your accountant on this - they are not qualified to make judgements about specialist tax issues (the clue's in the name), even if they have a better general knowledge than the average contractor. As I said earlier, on the one hand the risk is mainly for the supply chain above you, but not entirely. You could ask the foreign client whether they have a UK PE - they should be able to answer that straightforwardly. If they do, then the UK PE will be pursued by HMRC in the first instance for the failure of the supply chain to correctly operate the OPWR.

To correct an earlier post I made, I think it's actually the foreign client that issues the SDS and operates payroll when there's a UK PE, not the UK PE (but the UK PE is certainly liable, for obvious reasons) - crazy, but there you go.

[eek]

(a) Blimey!
(b) Thanks a million for your advice! It's really appreciated

FWIW, my accountant is going down the "operating a deemed payment yourself" route on the basis that the supply chain is entirely overseas, as in MYCO -> OVERSEAS INTERMEDIARY -> OVERSEAS END CLIENT which in turn is owned by OVERSEAS HOLDING COMPANY

The UK-present part of client is not the end client, it's another separate company who are also wholly owned by OVERSEAS HOLDING COMPANY, therefore UKCO is not at the top of the supply chain or even in the supply chain, which is why (to me) it beggars belief that they could even be involved!

the problem for the subsidy is that they exist and therefore HMRC can blame them even if they aren’t even aware of the work being done

its not fair but you can see why HMRC will use anyone they can vaguely hold responsible if money is involved

[Platypus]

That's the situation you're in, I'm afraid, and there's no getting around it. You may wish that you were still operating outside IR35 or, at worst, operating a deemed payment yourself, but that is no longer an option unless your client is a small company or the supply chain is fully overseas (or the supply chain is non-compliant, which is not where you want to be). You could try to negotiate an improved rate, but that's a separate issue.

(a) Blimey!
(b) Thanks a million for your advice! It's really appreciated

FWIW, my accountant is going down the "operating a deemed payment yourself" route on the basis that the supply chain is entirely overseas, as in MYCO -> OVERSEAS INTERMEDIARY -> OVERSEAS END CLIENT which in turn is owned by OVERSEAS HOLDING COMPANY

The UK-present part of client is not the end client, it's another separate company who are also wholly owned by OVERSEAS HOLDING COMPANY, therefore UKCO is not at the top of the supply chain or even in the supply chain, which is why (to me) it beggars belief that they could even be involved!

[jamesbrown]

P.S. If I go through an umbrella, aren't I just paying someone to run my payroll? They'll naturally deduct their fee and 'ers NI from my billings. So I'm worse off... although I recognise that involving an expert has advantages.

That's the situation you're in, I'm afraid, and there's no getting around it. You may wish that you were still operating outside IR35 or, at worst, operating a deemed payment yourself, but that is no longer an option unless your client is a small company or the supply chain is fully overseas (or the supply chain is non-compliant, which is not where you want to be). You could try to negotiate an improved rate, but that's a separate issue.

[jamesbrown]

Thank you for the replies!



I'm not arguing... but the UK connection doesn't know me, doesn't care about me, probably doesn't administer the OPWR for anyone (because (AFAIK) all contractors are hired the same way I am, through a Swedish workforce management company)...

Therefore I'd imagine that if I phoned them and said "hi, I'm a UK citizen who happens to be working indirectly for your parent in Sweden, turns out you have to make a status determination and administer payroll for me" that there would be blank looks all round and the phone would be hung up.

To put it another way, I'm very surprised that CLIENTCO UK LTD (likely a wholly owned subsidiary of CLIENTCO SWEDEN) could in any way have any responsibility for a contractor who is sub-contracted to CLIENTCO SWEDEN AB by MGMTCO SWEDEN AB.

As I said, I'm not denying that you are correct - as I certainly don't know - but this seems quite amazing to my small brain. Are you sure?!

TIA!

I am 100% certain as someone who deals with a lot of overseas clients and follows IR35 closely. Fwiw, "know your supply chain" was a large part of the motivation and expectation for the OPWR, so any UK company pleading ignorance is in a tricky spot - regardless, the law is clear enough about this aspect. Bear in mind that, until the last minute, HMG were, in all seriousness, proposing to shift this responsibility to overseas clients!

In a sense, it is not your concern. In another sense, you now have reason to believe that the supply chain is non-compliant, which creates some risk.

By far the least risky option for all parties (even if they don't know it) is for you to get a UK umbrella involved.

[Platypus]

P.S. If I go through an umbrella, aren't I just paying someone to run my payroll? They'll naturally deduct their fee and 'ers NI from my billings. So I'm worse off... although I recognise that involving an expert has advantages.

[Platypus]

Thank you for the replies!

I think there has been a misunderstanding in your supply chain.

If the end client has a UK connection and there is no other qualifying person in the supply chain below them, then that UK connection is ultimately responsible for administering the Off Payroll Working Rules and deducting payroll taxes. They are also the deemed employer. In other words, they should supply a timely SDS and deduct the relevant taxes, even if the overseas agency ultimately pays your PSC because the overseas agency is not a qualifying person (they don't have a UK connection).

I'm not arguing... but the UK connection doesn't know me, doesn't care about me, probably doesn't administer the OPWR for anyone (because (AFAIK) all contractors are hired the same way I am, through a Swedish workforce management company)...

Therefore I'd imagine that if I phoned them and said "hi, I'm a UK citizen who happens to be working indirectly for your parent in Sweden, turns out you have to make a status determination and administer payroll for me" that there would be blank looks all round and the phone would be hung up.

To put it another way, I'm very surprised that CLIENTCO UK LTD (likely a wholly owned subsidiary of CLIENTCO SWEDEN) could in any way have any responsibility for a contractor who is sub-contracted to CLIENTCO SWEDEN AB by MGMTCO SWEDEN AB.

As I said, I'm not denying that you are correct - as I certainly don't know - but this seems quite amazing to my small brain. Are you sure?!

TIA!

[jamesbrown]

So a Swedish company is paying YourCo? I think that would mean you are outside the scope of the regulation, but you may be caught by Swedish tax so would need to investigate that

No, it doesn't mean that. If there is a UK connection in the supply chain above the PSC, then that connection is responsible for operating the OPWR. If there weren't a UK connection, then the OP's PSC would be responsible for operating IR35 (i.e., Chapter 8 ITEPA, or "old IR35") - which would mean a deemed payment because the OP considers themselves caught - but the OP states that the end client has "a UK presence", so they don't get the opportunity to decide whether it's caught or to operate payroll taxes themselves (and if they do, the supply chain is not compliant). If there's a UK permanent establishment (e.g., a UK office), then that is a UK connection.

[eek]

So a Swedish company is paying YourCo? I think that would mean you are outside the scope of the regulation, but you may be caught by Swedish tax so would need to investigate that

All work done in the UK so that isn’t relevant - only if you are sat working in Sweden would you need to be paying Swedish tax.

as
jamesbrown states the easiest solution would be to find an umbrella company to do this. If not just be very careful and ensure you can demonstrate that all the invoice money went in the following directions:

bank transfer fees (as I suspect you are being paid in krona)
Pension
NI and income tax
your personal bank account

but speak to Lucy at Clarity and see if she can help - it’s probably worth the money for the hassle it will save you

[SimonMac]

After being comfortably outside IR35 for many years, and therefore having paid not enough attention to the new rules, I now find myself in a changed situation:

- New contract, Economic Employer a.k.a. End Client is a company in Sweden, which also has a UK presence
- MyCo is retained through what is I suppose an agency ... a "workforce management solution provider" in Sweden who has no UK presence
- My role is very clearly 'staff augmentation', so I'm caught, and will PAYE all MyCo revenues
- I won't be living or working in Sweden therefore no Swedish taxes to pay

In this situation, I believe that MyCo must pay employers NI (13.8%), while I of course pay employees NI (12%) as well as UK income tax, which altogether is rather a lot.

My accountant (not a contractor or IR35 specialist) did advise that "someone has to pay the employers NI, so it must be you".

I've posted here for a sanity check: anyone else in a similar position? Is this correct?

P.S. please don't reply only to tell me that I'm not cut out to be a contractor, or other such slagging off. Thanks!
P.P.S. Yes I did a search and seemed to find only that UK contractors with UK payroll companies don't technically pay their own ers NI but that they can expect a rate adjustment to cover the payroll company paying it, so basically, they do pay it, albeit indirectly.

Thanks in advance!

So a Swedish company is paying YourCo? I think that would mean you are outside the scope of the regulation, but you may be caught by Swedish tax so would need to investigate that

[jamesbrown]

I think there has been a misunderstanding in your supply chain.

If the end client has a UK connection and there is no other qualifying person in the supply chain below them, then that UK connection is ultimately responsible for administering the Off Payroll Working Rules and deducting payroll taxes. They are also the deemed employer. In other words, they should supply a timely SDS and deduct the relevant taxes, even if the overseas agency ultimately pays your PSC because the overseas agency is not a qualifying person (they don't have a UK connection).

Overall, it would be much simpler if you worked through a UK umbrella company. If your PSC is receiving payments without tax deducted at source on a contract the falls within the rules (and for which there is a qualifying person in the supply chain above your PSC), then your supply chain is not operating the rules correctly.