Relocating abroad and moving into contracting, what about IR35?

[guferos]

Hi,

I have been working as a software developer for my current employer since 2014. In June this year I will be permanently relocating to the EU where I want to register an LTD equivalent company and continue working for my employer as contractor. My organisation through which I provide services to my current employer will be based wholly overseas and I will become resident of the EU country I am moving to. Could I land under the IR35 or I am safe due to company being registered outside the UK?

[northernladuk]

Dunno but do these two threads cover your situation at all?

https://forums.contractoruk.com/acco...u-country.html

https://forums.contractoruk.com/acco...-and-ir35.html

There are other similar questions. If you go to google and type in <keywords> site:forums.contractoruk.com I am sure you will find the same question asked. Play around with the keywords. EU based UK client or EU contractor UK client or something like that.

[jamesbrown]

It isn't where the company is registered that matters, it's where you're doing the work. But if you are a non-UK tax resident and working overseas, such that you are not chargeable to UK tax or NICs, then IR35 cannot apply because IR35 is part of UK tax legislation and applies only when there is a charge to UK tax or NICs.

That said, two caveats. First, it is harder to become non-UK resident than you might think (see the Statutory Residence Test). Second, you will find that many overseas jurisdictions have similar or more stringent rules than IR35 for disguised employment and working for a former employer is going to be up there in any jurisdiction with strict deeming criteria.

Speak to Sue B.

[Sue B]

Thank you!

Guferos - Happy to have a chat if you need a sounding board, feel free to send me a DM to arrange.

[northernladuk]

Thank you!

Guferos - Happy to have a chat if you need a sounding board, feel free to send me a DM to arrange.

I don't think he can DM with only one post. cojak can he be authorised to DM with so few posts?

[Sue B]

Oops, ok can reach me on 07949 828 457

[guferos]

It isn't where the company is registered that matters, it's where you're doing the work. But if you are a non-UK tax resident and working overseas, such that you are not chargeable to UK tax or NICs, then IR35 cannot apply because IR35 is part of UK tax legislation and applies only when there is a charge to UK tax or NICs.

That said, two caveats. First, it is harder to become non-UK resident than you might think (see the Statutory Residence Test). Second, you will find that many overseas jurisdictions have similar or more stringent rules than IR35 for disguised employment and working for a former employer is going to be up there in any jurisdiction with strict deeming criteria.

Speak to Sue B.

Wow, I am actually quite shocked how difficult it is to become non-UK resident. I was naive enough thinking that it would be just a matter of me letting HMRC know that I am moving permanently overseas and want to change my tax residency. I've looked into the Statutory Residency Test and it looks that I if I leave UK earlier than 120 days since the beginning of new tax year, then I should become non-resident but not sure if I can claim it immediately after leaving or only at the end of the next tax year.

I moving to Poland and I am sure that they have similar tax rule to IR35 however I am not sure if employment abroad would count as previous employer, I guess I need to check it with local accountants.

[guferos]

Oops, ok can reach me on 07949 828 457

That's great, I'll give you a call today. Thanks very much.

[northernladuk]

Be aware that this arrangement might work for your ex employer but once that contract is done it's unlikely you'll be able to get any further UK contract work as agents won't deal with a non UK entity.

[Fred Bloggs]

OP needs to study RDR3 very carefully. Likely the first year abroad he/she would qualify for split year treatment regarding UK tax. Needless to say, it can be complex and scrupulous record keeping is vital. I did split year treatment for year of departure and year of return, no issue.