Reply to: IR35 : Working from France but going to UK 1 week per month

[gisp]

The way I see it:

1. Contract will be inside IR35
2. Paid to you by UK brolly, i.e. all UK tax and NICs deducted.

It is the best thing to just do nothing. Live in France if you want, pay all your taxes in the UK. Submit FR tax return with all income described as world income. Pay the difference in tax in FR (if any).

This might not follow ALL the very complicated rules on double taxation, tax residency etc, however it is a good example of low risk of co.ck ups.

You must have settled status to work in the UK (or UK citizenship) and this might be another problem.

[jamesbrown]

Btw, for anyone interested, here is the HMRC view on international matters w/r to the Off Payroll Working rules (need to register with an e-mail address):

https://register.gotowebinar.com/register/6657159591576552976

[jamesbrown]

Ultimately, though, it's out of the OPs hands if the UK company is a large company because they must decide themselves on their responsibilities w/r to IR35 (both if they need to issue an SDS and to then issue it in a timely way and to operate deductions as needed), not the OP.

[jamesbrown]

Liability to tax is one thing. I agree that there is a UK tax liability on substantive work performed in the UK (edit: or, I should say, potentially, because it's possible that no PAYE is due if the contractor obtains a no tax PAYE code). Note that I was careful not to suggest otherwise. Liability to IR35 is another. For example, a UK tax resident with less than a 5% share interest in a UK company is surely still liable to tax on income received from that company, just not IR35.

[NotAllThere]

Using a UK umbrella sounds eminently sensible if you are UK tax resident. Again, you do need to be UK tax resident for IR35 to apply and you assert that you will not be. Like IR35 status, that is a matter of fact, not choice, so just make sure you are correct.

Otherwise, I think the IR35 aspects are complicated. In that case, the first thing to establish is where the responsibility lies. For example, if the end client is in the UK and the UK company is not a small company (according to the Companies Act definition) and your PSC is outside the UK and you are a UK tax resident, then the UK end client will be responsible for determining your IR35 status using the Off Payroll Working Rules and deducting taxes at source if they deem the contract to be inside.

If you have a single contract with that UK end client and the contract is inside IR35, they will not legally be able to pay part of your fees as a deemed payment and the rest gross and, overall, you are looking at a complicated mess. That is why an umbrella company would make a lot of sense for the UK work if you can break the work into two separate and distinct parts. If, however, the end client is a small company (and you are UK tax resident), then the responsibility lies with your overseas PSC to apply the rules correctly. Again, for the avoidance of doubt, this only matters if you are UK tax resident.

AIUI, the principle is - if you perform work in the UK, you are liable to UK tax on the income arising. Tax residency is whether you are liable for tax on worldwide earnings and is a different world of pain.

For example, if the end client is in the UK and the UK company is not a small company (according to the Companies Act definition) and your PSC is outside the UK and you are a UK tax resident, then the UK end client will be responsible for determining your IR35 status using the Off Payroll Working Rules and deducting taxes at source if they deem the contract to be inside.

Is that right or should it be

For example, if the end client is in the UK and the UK company is not a small company (according to the Companies Act definition) and your PSC is outside the UK and you are working in the UK, then the UK end client will be responsible for determining your IR35 status using the Off Payroll Working Rules and deducting taxes at source if they deem the contract to be inside.

?

[jamesbrown]

Using a UK umbrella sounds eminently sensible if you are UK tax resident. Again, you do need to be UK tax resident for IR35 to apply and you assert that you will not be. Like IR35 status, that is a matter of fact, not choice, so just make sure you are correct.

Otherwise, I think the IR35 aspects are complicated. In that case, the first thing to establish is where the responsibility lies. For example, if the end client is in the UK and the UK company is not a small company (according to the Companies Act definition) and your PSC is outside the UK and you are a UK tax resident, then the UK end client will be responsible for determining your IR35 status using the Off Payroll Working Rules and deducting taxes at source if they deem the contract to be inside.

If you have a single contract with that UK end client and the contract is inside IR35, they will not legally be able to pay part of your fees as a deemed payment and the rest gross and, overall, you are looking at a complicated mess. That is why an umbrella company would make a lot of sense for the UK work if you can break the work into two separate and distinct parts. If, however, the end client is a small company (and you are UK tax resident), then the responsibility lies with your overseas PSC to apply the rules correctly. Again, for the avoidance of doubt, this only matters if you are UK tax resident.

[loxdevil]

Thanks a lot for your help guys !
I looked at UK residency criterias and I will not be UK tax resident as I will be in the UK for only 60-72 days a year.

I also had a chat with Sue who told me that I would be off of IR35 only if my trip to the UK are flagged as Business Trip and not contractual (which is very unlikely, like mentionned by NotAllThere ).
It seems one of the best way to avoid IR35 would be to have 2 contracts with my UK company : 1 with my own contracting French company for when I work in France and 1 against an umbrella company in the UK, for my 1 week per month in the UK.

If I do not go by this plan (not sure my current company would love that) I am not yet sure if it is possible for me to pay IR35 taxes from my French company or if I absolutely need a UK legal company. I will also need to check that I am not overtaxed by HMRC for this week (mainly on the fact that jamesbrown mentionned IR35 is a binary choice) as I don't want HMRC to tax me on my full month where I only work for 1 week in UK.

[NotAllThere]

Ah, thanks, so my fault

Er... no. It should be able to quote references.

[jamesbrown]

Fixed it for you. it's because there was one of those @ thingies at the start of the quote.

Ah, thanks, so my fault

[NotAllThere]

Quoting is fubared (or perhaps my use of it). Nick! Anyway, you get the idea.

Fixed it for you. it's because there was one of those @ thingies at the start of the quote.

[jamesbrown]

Quoting is fubared (or perhaps my use of it). Nick! Anyway, you get the idea.

[jamesbrown]

when you say UK resident, what do you mean ?
I am French and was in UK for 3Y, but I decided that I will come back to France in the very near future to create my own company.
Unless I am completely wrong, once I am back in France, I will be back as French Resident and French Tax resident, won't I ?
Does 1 week per month in an hotel in the UK will also make me a UK resident ?

You can be a tax resident of more than one country at one time. In the UK, it's determined by the Statutory Residence Test, which looks at time spent here working but also ties, so complete it. There are mechanisms to avoid double taxation of the same income, in principle, but that doesn't change your tax residency status. Anyway, I strongly suggest you speak to an expert and I would recommend Sue, as noted above. There are probably more things you don't know right now than things you do know.

[NotAllThere]

Does 1 week per month in an hotel in the UK will also make me a UK resident ?

A few points to ponder while waiting to speak to an expert.

• Any and all work you do while physically present in the UK is subject to UK tax regardless of whether you are tax resident.
• If you work 5 days a month in the UK, that's 60 days a year. Check out the tax residency rules and see whether you fall foul of them. Since you'll actually be working the Monday and Friday, they'll most likely count as full days.
• If you are tax resident in the UK and France, which is possible, then you will have to fill out a tax return in both countries. You will be taxable on worldwide income in both countries.
• The UK and France have dual taxation agreements, so any tax you pay in one country is offset against the other.
• You need to find out about NI contributions as well.

The only way that your UK trips won't be taxable at all is if you only attend meetings or attend workshops and suchlike. That seems very unlikely in your case. I used to work for a UK client from offshore. But I visited their offices 3-4 days a year.

[loxdevil]

ladymuck yes, the UK company has accepted that, to the condition that I go to their office 1 week per month. We are currently building the contract but I would like to be sure of my IR35 status before signing anything.

jamesbrown, when you say UK resident, what do you mean ?
I am French and was in UK for 3Y, but I decided that I will come back to France in the very near future to create my own company.
Unless I am completely wrong, once I am back in France, I will be back as French Resident and French Tax resident, won't I ?
Does 1 week per month in an hotel in the UK will also make me a UK resident ?

[jamesbrown]

Short answer is, yes, the contract will be subject to IR35 if you're UK resident and you will probably be UK resident under the statutory residence test, but you should confirm that. It's quite hard to lose your tax residency now. Also, you cannot apportion the contract value in the way you think - one week under IR35 and the rest not. It's a binary thing, just like statutory residence (on which IR35 minimally depends, along with a 5% share ownership).

Speak to Sue Abel-Beswick at optimum (formerly of I-Paye).