Reply to: Help please with IR35 Scope

[nicke1]

Hi Nick

Could you perhaps give me a call this afternoon, as there is quite a lot to discuss. IR35 being one thing, plus offshore intermediaries, dutch payroll vs BV etc.

My direct line is 0151 443 6830, and I am mostly free this afternoon.

Thanks

Hi Sue,

Many thanks, I'm in London this week so will try to call this pm.

Cheers

[Sue B]

Hi Nick

Could you perhaps give me a call this afternoon, as there is quite a lot to discuss. IR35 being one thing, plus offshore intermediaries, dutch payroll vs BV etc.

My direct line is 0151 443 6830, and I am mostly free this afternoon.

Thanks

[nicke1]

Hi,

I haven't had a chance to read all this thread yet but didn't want to appear rude by not posting, I'm sorry I missed this originally.

If you are still looking at this query then please feel free to get in touch.

Thanks

Hi Sue,

Thanks, I still have the underlying issue in that the UK end client will not allow me to use my UK Ltd going forward.

Subsequent to posting I communicated with a number of Umbrella companies and very surprisingly even though I explained that I'm tax resident in the Netherlands all of them initially said they would simply 'calculate' me through a UK payroll with the HMRC provided tax code - that was the extent of their offering. None of them recognized that they should register for an overseas payroll in the NL and calculate NL taxes, etc. for me.

I'm currently looking at a structure where I create an NL company and contract with an NL agent who in turn holds a contract with the UK end client - the UK end client is willing to accept that this is outside scope of IR35.

I need to move the 30% ruling from my UK company to the 'new' NL company, etc. Likely it will cost me around 20-25% given I have an extra agency in the chain, I can't use my UK tax free earnings going forward for days worked in the UK, shareholders >5% must have a min salary of €45k, etc.


As I discussed earlier I had intended to create an NL BV anyway, at some point. Using a UK company could be challenged (corporation tax, establishment), although I tried to mitigate issues here by paying a salary in the NL equivalent to the UK revenue.

[Sue B]

Hi,

I haven't had a chance to read all this thread yet but didn't want to appear rude by not posting, I'm sorry I missed this originally.

If you are still looking at this query then please feel free to get in touch.

Thanks

[nicke1]

Phone them up

I’m betting No


Sent from my iPhone using Contractor UK Forum

Hi,

Any particular reason? This would seem to be hugely disadvantageous to foreign workers. All people in a similar situation to me would be double-taxed at source and then have the added expense of incurring professional fees to recover from one of the authorities at some stage. Why, if I'm not resident for UK tax do you think the NT tax code would be rescinded?


Does anyone know if the following structure avoids IR35?

ClientCo-Uk -> Agent-UK -> Agent-NL - MyPSC-NL


I could create a BV but I'm not convinced that this chain 'works'.

Cheers

[GhostofTarbera]

Hi

Many thanks all again.

re the NT tax code.

Yes, that would indicate 'no tax' to withhold (in the UK) but I would still be subject to IR35. And whilst no UK tax is withheld I'm being fully processed via a payroll, therefore the contract value would be processed through an NL payroll. The UK agent would need to take care of all of this.

There is no income to process through a company. My UK company becomes irrelevant.

So obviously still a huge impact to me, all revenue processed as salary, can't recover VAT on expenses, huge increase in costs, etc. etc.

And that's assuming the HMRC allow the NT tax code to continue. Who knows whether they would rescind, etc.

Phone them up

I’m betting No


Sent from my iPhone using Contractor UK Forum

[nicke1]

Hi

Many thanks all again.

re the NT tax code.

Yes, that would indicate 'no tax' to withhold (in the UK) but I would still be subject to IR35. And whilst no UK tax is withheld I'm being fully processed via a payroll, therefore the contract value would be processed through an NL payroll. The UK agent would need to take care of all of this.

There is no income to process through a company. My UK company becomes irrelevant.

So obviously still a huge impact to me, all revenue processed as salary, can't recover VAT on expenses, huge increase in costs, etc. etc.

And that's assuming the HMRC allow the NT tax code to continue. Who knows whether they would rescind, etc.

[jamesbrown]

Well your posts mostly read like trolling because of the way you word them. You drip feed semi useful snippets in amongst unhelpful crud and then get all uppity when someone doesn't like the way you put things across.

You're exactly the same in person which is actually quite refreshing for a troll.

[ladymuck]

Alas not in this case

Ladymuck is a tad dim

I’ve done exactly same setup as op

It’s illegal to my cost

Mate PM me if you want to know why it’s illegal what to do now


Sent from my iPhone using Contractor UK Forum

Well your posts mostly read like trolling because of the way you word them. You drip feed semi useful snippets in amongst unhelpful crud and then get all uppity when someone doesn't like the way you put things across.

You're exactly the same in person which is actually quite refreshing for a troll.

[jamesbrown]

Have you provided them your NT tax code? How are they going to withhold tax on an NT tax code?

Right, they can't, but what happens when the OP subsequently fails the RDR3 and becomes UK resident and fails to update the supply chain? Sounds complicated. The draft legislation allows for the transfer of debt, even as a result of mistakes by others (save the fraud get-out).

[jamesbrown]

Agree all

But as a Dutch resident he needs to prove

all his income is via Dutch HMCR and not a dodgy as above setup is


Sent from my iPhone using Contractor UK Forum

Yeah, I lived there for several years and the Belastingdienst do, indeed, not feck around, but international tax is complicated, so the OP should get professional advice on that. As a controlling person, the OP's PSC probably has a Dutch PE.

If Sue pops in, she'll set the OP straight. In the mean time:

Working in the EEA - I-PAYE | UK and European Umbrella Services

--> Netherlands

Frequently Asked Questions
Q. I currently work on a project in the United Kingdom through a PSC and have an assignment in the
Netherlands, is it true that I can operate the same model in the Netherlands?
A. Under Dutch Domestic Law a UK PSC may be considered as having a Permanent Establishment in the
Netherlands, which means that all income derived by the business will be subject to Dutch Taxation. No matter
the taxation position of the company any employment income paid in respect of duties performed in Holland will
be subject to Dutch Taxation and Social Security from day 1.
In addition any dividends payable to shareholders will be subject to Dutch Dividend Taxation either at resident or
non-resident rates.
Q. What happens if I choose to ignore the rules?
A. There is Chain of Liability Liability Law in the Netherlands, which means that liabilities can pass up the
contractual chain, the Dutch also use the Mutual Assistance Recovery Directive (MARD) to request the UK and
other Tax Authorities to collect any unpaid moneys due.
From 1 October 2017 new legislation has been enacted in the United Kingdom that means that any entity engaging
in or with business that evades taxation in a Foreign Country will be subject to an unlimited fine. Failing to report
income to the Dutch Authorities is Tax Evasion, not avoidance, and under Dutch Law would generally lead to a
criminal conviction.

[Lance]

Help please with IR35 Scope

Have you provided them your NT tax code? How are they going to withhold tax on an NT tax code?

HMRC should be willing to issue a letter confirming that those with an NT tax code are out of scope.

No idea on the NL front as to whether you are being trolled or not, but it's entirely a separate question from the IR35 one. You may or may not be operating legally there, but re: IR35 the NT tax code should seal it.

Indeed.
Inside IR35 with an NT tax code is still inside, but still no tax.
National Insurance will probably still be deducted as I don’t believe NT covers it.

The cash goes to the fee payer, who then deducts zero tax, and then pays it to the recipient. In this case the recipient is a UK LTD.
Might be worth unregistering for VAT though as that could complicate things even more.

EDIT: no UK CT to pay either as it’s not profit I think. That would then mean the LTD is now Dutch tax resident, which is what Tarbie was getting at I think...

I am also not an international tax lawyer.

[WordIsBond]

Have you provided them your NT tax code? How are they going to withhold tax on an NT tax code?

HMRC should be willing to issue a letter confirming that those with an NT tax code are out of scope.

No idea on the NL front as to whether you are being trolled or not, but it's entirely a separate question from the IR35 one. You may or may not be operating legally there, but re: IR35 the NT tax code should seal it.

[GhostofTarbera]

Think about it from their POV. Post April, the UK supply chain above YourCo will be both responsible and liable, starting with the Fee Payer (ordinarily). You can change your tax residency at any time during a tax year, outside of the control of the UK supply chain, and bringing you within scope.

Under the new regime, I would do precisely what your UK supply chain is currently doing. I would stick my fingers in my ears and say, no exceptions, you're being assessed (or you're conforming to whatever policy decision we're making for everyone else). That is the only sensible thing for them to do, IMHO. You'll need professional advice for a better answer.

Agree all

But as a Dutch resident he needs to prove

all his income is via Dutch HMCR and not a dodgy as above setup is


Sent from my iPhone using Contractor UK Forum

[jamesbrown]

Thanks, I’ll try. I tried to engage with the consulting firm that is used by my agent but they haven’t been very helpful. To date their responses have been generic copy and pastes. I presume part of the issue is that no one really knows some of these answers for how pragmatically IR35 will execute and be applied.

Think about it from their POV. Post April, the UK supply chain above YourCo will be both responsible and liable, starting with the Fee Payer (ordinarily). You can change your tax residency at any time during a tax year, outside of the control of the UK supply chain, and bringing you within scope.

Under the new regime, I would do precisely what your UK supply chain is currently doing. I would stick my fingers in my ears and say, no exceptions, you're being assessed (or you're conforming to whatever policy decision we're making for everyone else). That is the only sensible thing for them to do, IMHO. You'll need professional advice for a better answer.