Reply to: Contracting for an EU company

[northernladuk]

Thanks again for all the replies.

I spoke with the Danish people and asked if I'd they were an agency or consultancy and he said 'definatly agency' but neither of us are legal experts and I certainly don't know how HMRC would define things.

For now, they are going to send off my information to the end client do it does sound like an agency.

Wouldn't a look at their website not help? The difference between an agency and consultancy offering should be fairly clear from their service offerings?

But yeah, that's exactly how an agency would work so sounds like it.

[galthop]

Thanks again for all the replies.

I spoke with the Danish people and asked if I'd they were an agency or consultancy and he said 'definatly agency' but neither of us are legal experts and I certainly don't know how HMRC would define things.

For now, they are going to send off my information to the end client do it does sound like an agency.

[jamesbrown]

I would assume that for HMRC the paper trail ends at the Danish Consultancy so the contractor will be liable.

Yep, unless the Danish consultancy has a "UK connection", in which case HMRC will pursue them (absent fraud). Establishing whether the Chapter 8 or Chapter 10 rules apply is relatively straightforward when compared to establishing status (in the sense that there is a clear definition of company size and "UK connection").

[BlasterBates]

I would assume that for HMRC the paper trail ends at the Danish Consultancy so the contractor will be liable.

[jamesbrown]

For some reason, I read the situation as the Danish company having a UK connection but, now I re-read the OP, I have absolutely no idea how I got that impression. Anyway, yes, the rules were definitely revised for fully overseas clients (I know this because I mostly work with overseas clients), such that Chapter 8 applies. However, if the overseas client has a UK PE (for example), then the overseas client is responsible for the SDS (and the UK PE is liable), even if the UK PE has no knowledge of the contract or the risk being created for them. Anyway, sorry about that...

[eek]

How can a Danish company be expected to make an IR35 determination?
Is IR35 even a thing in Denmark?

No which is why the rules seem to have changed (reading BlasterBates comments).

The issue however is that the Danish company is a consultancy who may really just be acting as an agency here so could be a question as to who the ultimate end client / customer is. And that ultimate customer could have a UK Branch.

IR35 is a mess that just keeps on creating different issues.

[Wobblyheed]

How can a Danish company be expected to make an IR35 determination?
Is IR35 even a thing in Denmark?

[Lance]

This is starting to look like its not worth the effort. The client in Denmark is a consulting firm that send contractors where they are needed and I don't yet know who the end client it. The UK agency say they have not been told. I have a teams meeting with the Danish consultants tomorrow when I will find out more, hopefully.

maybe. Maybe not.
It depends on whether you are a resource provided to the end client. If so, and if they have a UK presence then the end client makes the determination.
But if you are on a client as a consultancy resource then the end client doesn't make the decision.

Time to do some proper research as you NEED to know yourself the implications.
Don't expect the Danish consultancy to be helpful as to this. It's not their problem.

[galthop]

This is starting to look like its not worth the effort. The client in Denmark is a consulting firm that send contractors where they are needed and I don't yet know who the end client it. The UK agency say they have not been told. I have a teams meeting with the Danish consultants tomorrow when I will find out more, hopefully.

[BlasterBates]

That doesn’t cover the scenario when the agency is within the UK (which you would have thought QDOS would be explicitly covering).

as wtt does at https://wttconsulting.co.uk/ir35-ref...-based-abroad/

That article from 2019 is unfortunately out of date as the government clarified this in the Finance Bill 2020.

https://www.markeltax.co.uk/industry...nt-is-overseas

nsurprisingly, many end clients based abroad are not even aware of IR35 legislation and contractors have become increasingly worried about how they will obtain an SDS from an overseas end client and the impact this could have on their businesses. It also raised the question: how would HMRC enforce compliance from overseas end clients and fee payers?

The government took note of these concerns and in response clarified the issue in the Finance Bill 2020 to exclude wholly overseas organisations with no UK presence from having to consider the off-payroll working rules. This means that where the end client is wholly overseas, the old rules will apply and it will be the responsibility of the individual’s limited company to determine IR35 status. This will come as a huge relief for many contractors.

[jamesbrown]

Thanks for the replies.

So the Danish client decides if the contract is inside IR35 and if it is then the agency would be responsible for paying employers NI, etc. It's this correct?

What happens if the client says the contract is outside if HMRC comes along later and says it is inside. Who is liable for the unpaid taxes?

Yes.

The Fee Payer (UK agency) would be liable, in the first instance, so check your contract carefully for any transfer of liability clauses.

[eek]

Here is a useful link:

https://www.qdoscontractor.com/news/...verseas-client

That doesn’t cover the scenario when the agency is within the UK (which you would have thought QDOS would be explicitly covering).

as wtt does at https://wttconsulting.co.uk/ir35-ref...-based-abroad/

[BlasterBates]

Here is a useful link:

https://www.qdoscontractor.com/news/...verseas-client

The rules are remarkably clear where the end user is based wholly overseas. In such cases, the rules state that the off-payroll rules do not apply. Therefore, the end client does not need to determine IR35 status, and the responsibility of determining IR35 status is then passed back to the contractor.

[eek]

Thanks for the replies.

So the Danish client decides if the contract is inside IR35 and if it is then the agency would be responsible for paying employers NI, etc. It's this correct?

What happens if the client says the contract is outside if HMRC comes along later and says it is inside. Who is liable for the unpaid taxes?

The Feepayer (agency) except the feepayer will be doing everything they can to pin responsibility on to you.

[galthop]

Thanks for the replies.

So the Danish client decides if the contract is inside IR35 and if it is then the agency would be responsible for paying employers NI, etc. It's this correct?

What happens if the client says the contract is outside if HMRC comes along later and says it is inside. Who is liable for the unpaid taxes?