Reply to: Been offered contractor position in Middle East

[AlanDavis]

If the contract is between the client and you personally, then IR35 is NOT in point and nothing to worry about in this regard.

Where the contractual arrangement is between the individual and the client then you need onoly concern yourself with the usual employed vs self-employed issues.

Thanks for replying. I don't actually understand the difference between the two - sorry...

For more info, the contract is between me and a middle east consulting company. The consulting company has a contract with the client and the client is invisible to the contract between me and the consulting company.

Further, since I can only charge days I work in the middle east and I will be coming back to the UK as I see necessary (although the contract with the consulting company says they decide, this is not really the case - its there to stop people taking the proverbial).

I will contact the agents recommended on here - thank you for the details. This is important because if I get hit with a 40% PAYE then it is not worth me taking on this opportunity as the daily rate wasn't that good...

Will keep the thread posted in the hope it might help someone in the same position as me...

Thanks again everyone.

[Bengal]

I agree Ir35 is a non-issue, they have to take your word for it.

But the point is you need to take advice as to how to tax your income. I would see an accountant to discuss the different ways. It is worth paying 100 quid to do this. Do you setup a company, tax the money as personal income or stay out the country for 12 months?

You won´t get an answer here.

I'll second BB's comments, sound advice mate...........

[BlasterBates]

I agree Ir35 is a non-issue, they have to take your word for it.

But the point is you need to take advice as to how to tax your income. I would see an accountant to discuss the different ways. It is worth paying 100 quid to do this. Do you setup a company, tax the money as personal income or stay out the country for 12 months?

You won´t get an answer here.

[Bengal]

If the contract is between the client and you personally, then IR35 is NOT in point and nothing to worry about in this regard.

Where the contractual arrangement is between the individual and the client then you need onoly concern yourself with the usual employed vs self-employed issues.

In this case as the client is overseas it will be difficult for HMRC to take the view that your relationshiop with the client is really an employment relationship. If, however, HMRC do take that view and are successful, then they would need to chase your client which they cannot do as client is not a UK resident. This, however, can leave it open to HMRC to seek PAYE from you but it is very unlikely that they will do this - too much trouble.

[Hex]

I have a draft contract, but can't for the life of me figure out if it is IR35. It clearly says I am a contractor and I can only get paid for work I do in the UAE. But then it says things like I am controlled by the client!

Anyone recommend a good lawyer/accountant to review the contract and give me solid advice on whether the contract will be in/out of IR35? Thanks!

Try:

Bauer and Cottrell (http://www.bauerandcottrell.co.uk/)
Roger Sinclair of egos (www.egos.co.uk)

[Fred Bloggs]

If you need the NI qualifying years for a state pension you can pay (fairly low, is it called class 4?) voluntary NI payments to maintain your record. I have enough years to qualify for state pension so I do not need to do that for a state pension other than S2P. IR35 will be irrelevant, it is you who will be employed, not the Ltd Co.

[AlanDavis]

One of the problems is finding an accountant that can actually help me (i.e. knows enough about working overseas and travelling).

The thing this all hinges on is IR35 (I guess like for all things on this site!).

I have a draft contract, but can't for the life of me figure out if it is IR35. It clearly says I am a contractor and I can only get paid for work I do in the UAE. But then it says things like I am controlled by the client!

Anyone recommend a good lawyer/accountant to review the contract and give me solid advice on whether the contract will be in/out of IR35? Thanks!

[BlasterBates]

Thanks you all for your replies.

I am better informed, but a little harrowed by the expereince that awaits.

I think where I may get stuck is ensuring the contract it between ME and the client. Apparently the client contract is not for Ltd companies, just individuals...anything I can do here?

I wouldn't worry about that, that is a UAE contract. Talk to your accountant, but you could arrange for income to be transferred into a Ltd probably, or maybe some (non-dodgy) Trust. For example you could simply invoice yourself from the UAE (don't see why not).

This definitely needs an accountant to advise you.

Or just stay out the country for a year.

It has just occured to me that if you are employed in the UAE, you may well be exempt from NI, if you declare that income. NI is not treated as a normal tax. Usually HMRC just charge on the tax. But you'd need to check.That would depend on the DTA between UAE and the UK.

[AlanDavis]

I have worked in the UAE before - its a nice place if you are with a good company. Social scene is interesting too - once you know where the Emirates and Eithad hostesses hang out, you can be on to a winner

My question is would I be able to avoid IR35 if I sign the contract (rather than a Ltd company, which I won't be able to do?)

My reading of IR35 is that they look at the working relationship between me and the client, so who signs it should not matter - I may be wrong, though.

[Fred Bloggs]

Thanks you all for your replies.

I am better informed, but a little harrowed by the expereince that awaits.

I think where I may get stuck is ensuring the contract it between ME and the client. Apparently the client contract is not for Ltd companies, just individuals...anything I can do here?

Not usually. They will be hiring you, not your company. Good luck, it'll be great experience for you this for sure.

[AlanDavis]

Thanks you all for your replies.

I am better informed, but a little harrowed by the expereince that awaits.

I think where I may get stuck is ensuring the contract it between ME and the client. Apparently the client contract is not for Ltd companies, just individuals...anything I can do here?

[ASB]

- The DTA between Britain and the relevant emirate should also be checked. It is possible that some income is treated as fully taxed - even if it has not had tax deducted. There are some circumstances in some DTA's where this can be used to advantage. I have no idea if your target destination is one of them.

You may be able to protect corporate profits by incorporating in a 3rd Jurisdiction. Though it is important to ensure that the incorpated body does not become resident in the UK by default. However at the point you extract the funds then they will of course be subject to the tax regime of wherever you happen to be resident at the time.

In your particulalr case it does look as though you might be tex resident in both the UK and the relevant emirate simultaneously, this may complicate your affairs a little.

[Bengal]

@Alandavis, to answer some of your questions and to clarify a couple of other points:

1. If you do not declare your overseas income to HMRC and HMRC did find out then you could be in big trouble as this, IMHO, would be tantamount to evasion and not simply avoidance. So, the risk is there and recently the government has been at pains to sign agreements with other countries under which the countries agree to share info. On the face of it, my view is there is little chance of HMRC finidng out - but I would be inclined to declare it - this is a "I can then sleep at night" scenario.

2. Ltd company would be best at least that way you can pay yourself in dividends and reduce your liability to tax/NIC.

3. IR35 can apply as IR35 looks at your relationship with the company engaging your services and if all boxes are ticked forces your company to apply PAYE to your drawings etc. Having said that, I would imagine it to be very difficult for HMRC to look at IR35 as one thing they would need to do is interview the engager and what are the chances of them going overseas for little return.

4. Contract MUST be between your Ltd company and the company you are working for.

5. Although this is not relevant as your contract is only for 6 months - to break tax residence in the UK you must be outside of the UK for a full tax year and no duties of the overseas work must not be performed from the UK (aside from incidental duties). As for coming back to the UK, if you are to spend a full tax year outside, I would suggest that this kept to a maximum of 90 days (the residence test is 183 days in any tax year or 90 days per tax year on average over a period of three years and this average calculation is on a rolling basis).

Hope this helps.

[NickNick]

It's either 5 or 10K, I can't recall now, but I had to go through some hoops transferring money in and out of South Africa a while back.

[BlasterBates]

Actually, since this is only a 6month contract and my redundancy payment will last me about 6 months, what if I just keep the money earned overseas...6 months later I'll hopefully have a UK job...

So from the taxman's point of view, I didn't need to work for the next 6 months...

I guess alarms would be raised if I transferred the money to the UK?

Yes depending on how much.

It is normal now for banks to register siginificant payments. That might get flagged.