Foreign client decides to open a UK subsidiary

[jamesbrown]

Or, rather, the crux will be whether they have established a PE, which is a factual question.

[jamesbrown]

I think it applies as soon as a Permanent Establishment is created (i.e., a fixed place of business in the UK). In that case, there would be a UK entity in the supply chain and indeed they would be responsible and liable w/r to the new Off Payroll Working rules. In terms of company size, it is based on the aggregate size of all companies in the group. So, yeah, sucks, but it sounds like you'd be caught out by this (in terms of the formal assessment needing to be made by the supply chain). You could play it cool like Del Boy, I suppose, because it's their responsibility to determine that it's their responsibility. Also, for much the same reason, it might not be a bad thing if they give you an outside determination.

[SuperLooper]

Contracting remotely for a foreign client with no UK presence. I make my own outside-IR35 determination, as the IR35 reform doesn't apply to foreign clients.

Client now decides to open a UK subsidiary, for reasons completely unrelated to workforce/contractors; it's purely a regulatory requirement from their perspective. The new UK sub has no staff and doesn't really do anything other than exist.

Both client and contractor want to keep going as before, with the contractor contracted directly to the foreign client, but now the UK subsidiary exists so the client may be dragged into IR35 determinations which they know nothing about.

At what point do the new IR35 rules apply to this situation? From the instant the UK subsidiary is incorporated?

Do the small company exemption rules apply to the UK subsidiary, or the foreign parent company?