Reply to: IR35 not a worry when providing services for foreign company?

[The Spartan]

Perhaps you could offer working remote in the UK with the odd visit. That would be perfectly above board.

Alternatively accept the Swiss taxing you and then an extra swipe from HMRC. Since Swiss tax rates are low would this be any worse than simply taxing it in the UK?

Unfortunately there's a huge disparity it the way dual taxation works or it could be how I understand it, here I lose 20-30% of what I earn at source (tax, social security, fees etc) as I have to use a payroll company. I'm on the B tariff here so 5.65% tax on my earnings HMRC will then apply a further 14.35% up to 42k GBP and then 34.35% on anything over that which would definitely screw me up for the rest of the tax year when I return to the UK.

Feel free to correct me that's just my basic understanding of it all.

[BlasterBates]

Which I have been so they're grasping at straws, thanks BB looks like I'm homeward bound. This is why I love CUK, I wonder how many other people are going to be caught by the new Statutory Residence Test having worked abroad for the previous year?

Perhaps you could offer working remote in the UK with the odd visit. That would be perfectly above board.

Alternatively accept the Swiss taxing you and then an extra swipe from HMRC. Since Swiss tax rates are low would this be any worse than simply taxing it in the UK?

[The Spartan]

Yes you need to be careful here, the Swiss tax year is the calendar year so you wouldn´t be able to claim only 90 days if you´ve already been their since the beginning of the year.

Which I have been so they're grasping at straws, thanks BB looks like I'm homeward bound. This is why I love CUK, I wonder how many other people are going to be caught by the new Statutory Residence Test having worked abroad for the previous year?

[BlasterBates]

Guess this one is going to go down to the wire then, because of the new Statutory Residence Test from the 5th April I am more or less now classed as a UK resident (following the criteria that in the previous 3 tax years I was in UK 2 out of 3 the third being in Switzerland). The company need me to stay on but I've explained that the more they pay me the more I'll owe Hector so they're looking at alternative solutions such as working for the UK subsidiary but being posted abroad. Apparently I don't need a work permit if I work in Switzerland for less than 90 working days per calendar year Registration procedure all very confusing I'm bound to get shafted.

Yes you need to be careful here, the Swiss tax year is the calendar year so you wouldn´t be able to claim only 90 days if you´ve already been their since the beginning of the year.

[The Spartan]

I think you do need a work permit mate - albeit an automatic one, the 90 day thing wrt to CH is to do with not needing a visa to stay without a job. CH isn't EU, just adopts the directive and interprets it to suit!

Thanks Stek I thought as much, I'll tell them they'll have to let me work remotely in that case I'm not risking getting hauled over the coals by two tax authorities

[stek]

IR35 not a worry when providing services for foreign company?

I think you do need a work permit mate - albeit an automatic one, the 90 day thing wrt to CH is to do with not needing a visa to stay without a job. CH isn't EU, just adopts the directive and interprets it to suit!

[The Spartan]

Guess this one is going to go down to the wire then, because of the new Statutory Residence Test from the 5th April I am more or less now classed as a UK resident (following the criteria that in the previous 3 tax years I was in UK 2 out of 3 the third being in Switzerland). The company need me to stay on but I've explained that the more they pay me the more I'll owe Hector so they're looking at alternative solutions such as working for the UK subsidiary but being posted abroad. Apparently I don't need a work permit if I work in Switzerland for less than 90 working days per calendar year Registration procedure all very confusing I'm bound to get shafted.

[SueEllen]

Just read through this thread and it's very interesting, would the outcome be any different if it was say a 3 month contract with the money paid to the UK Ltd company but the contractor commuting weekly to the office in Zurich?

You risk being in both the Swiss and UK tax systems.

I can't be bothered to search for the information for you but some countries, and I'm sure Switzerland is one of them, you cannot use your limited company as you risk their taxman chasing you to the UK and HMRC being helpful.

[The Spartan]

Just read through this thread and it's very interesting, would the outcome be any different if it was say a 3 month contract with the money paid to the UK Ltd company but the contractor commuting weekly to the office in Zurich?

[BlasterBates]

The fact that you work on your own premises is a very clear indication. The fact that the "employer" isn´t even in the UK means that they wouldn´t even be obliged to respond to HMRC and I can´t see HMRC are going to bother going through the hurdles to contact them via a foreign tax authority. Since it would be difficult for them to gather evidence it´s highly unlikely they would want to check further than simply the contract. Worth just making sure the contract is compliant.

[Ignis Fatuus]

Well I was thinking that #2 would never apply, since the company I'm providing services to has no UK office, then I could only ever be viewed as an employed earner in Switzerland, so no NIC applies.

However it's all clear as mud to me, which is why I thought I'd ask.

Cheers,
EF

Who is "I"? On what basis are you providing the services?

If you do not pay somebody's NIC (Swiss or UK) on the income, both countries are going to want to know your justification for not doing so.

The Swiss justification for not paying Swiss social contributions would be that you continue to be resident in the UK, and pay UK NIC on your Swiss income.

The UK justification for not paying UK NIC would be either:
1. you are employed by a Swiss employer and pay Swiss social contributions on your Swiss income; or
2. the income is not employment income.
#2 is what IR35 is designed to decide.



Edit: jamesbrown, I agree with you. But I do suspect that if you are not paying NIC or equivalent abroad, then you will be tested on whether you are due to pay it here.

[jamesbrown]

I beg to diagree with SE and BB. ISTM that you may be at risk. From the linked ESM3130:

1:

2:

3:


ISTM that you might be considered to fall under #1; and if so then #2 would apply and catch you in IR35; and that by your own admission the duties will not mainly be performed abroad, so you can not use #3 as a get-out.

I think you're reading this wrong. I think it is a procedure for determining whether the legislation applies in principle, i.e. whether the intermediaries legislation applies for NIC purposes in principle (because the worker is or is not delivering the services and paying contributions abroad).

[jamesbrown]

Two things here. First, IR35 does not only apply to clients based in the UK, it applies to any clients. It is no less important to have your contract reviewed and working practices aligned when working for foreign clients. it may be more difficult for HMRC to prosecute a case, but that is incidental. Secondly, your contract and working conditions may or may not be outside of IR35. On the face of it, you'd be hard-pressed to have this sort of working arrangement fall inside, but it's nevertheless important to have the appropriate contract wording.

[electronicfur]

ISTM that you might be considered to fall under #1; and if so then #2 would apply and catch you in IR35; and that by your own admission the duties will not mainly be performed abroad, so you can not use #3 as a get-out.

Well I was thinking that #2 would never apply, since the company I'm providing services to has no UK office, then I could only ever be viewed as an employed earner in Switzerland, so no NIC applies.

However it's all clear as mud to me, which is why I thought I'd ask.

Cheers,
EF

[Ignis Fatuus]

I beg to diagree with SE and BB. ISTM that you may be at risk. From the linked ESM3130:

1:

The definition of “employed earner” is (...) “a person who is gainfully employed in Great Britain either under a contract of service (...).

2:

Only if the contract between the worker and client would result in the worker being an employed earner under this definition will the intermediaries legislation bite for NICs purposes.

3:

However, where the duties are to be performed abroad with an overseas client there are exceptions to this general rule, depending on where the client is based.

ISTM that you might be considered to fall under #1; and if so then #2 would apply and catch you in IR35; and that by your own admission the duties will not mainly be performed abroad, so you can not use #3 as a get-out.