IR35, USA client and umbrellas

[dogeson]

Hello,

I've been contracting through my LTD for more than a year for a US based client (no UK presence), and I self-determined myself to outside IR35 (RoS, MOO, Control, managed to amend my contract so they are more unfettered). The only red flags are that I am personally getting stock options (NSOs, US startup), and not through the company. QDOS said that's ok. as long it's not an employee scheme equity. Also retainer contract (fixed monthly paymenet).
Anyway, because of that I am worried about IR35 and losing my sleep over it. I do have insurance if they come knocking, which is unlikely giving the odds, and even more unlikely to be personally liable for the tax.

Now, for the current client (US one), they do offer a way to be "employed" via PEO, so that's inside IR35?

What are the risks of going that way? Since the client is overseas, the only entity HMRC will see in the supply chain is the umbrella company, they'll have no idea that I was contracting with them B2B through my LTD right? Or this can trigger an investigaton?

[cojak]

If it’s an overseas client with no UK presence then it’s a straightforward outside contract. You can use your LTd and HMRC would be ok with this.

[jamesbrown]

If it’s an overseas client with no UK presence then it’s a straightforward outside contract. You can use your LTd and HMRC would be ok with this.

A straightforward Chapter 8 contract, surely? Whether it’s outside IR35 depends on the facts. That said, it would really be quite hard to suffer D&C from a US client, which is a prerequisite to being inside.

Regarding red flags and HMRC, who knows? They don’t publish their risk assessment policies, obviously. Of course, moving from outside to inside would be much worse than moving from outside to umbrella, especially without a change in working practices but, either way, it would beg the question about why you made this move.

[dogeson]

Sorry, I think I made a mistake by assuming the umbrella is the same as PEO.
Apparently that's a PEO so I'll be actually employed rather than a contractor, thus they would handle NI etc. So from the HMRC perspective (at least on paper), I'm employed for the company A, they shouldn't really see the chain should they?

But yeah, my main concerns with the client are as I stated, retainer fee (thus, fixed monthly, even if I take a week off) + stock shares. And unlikely they'll answer any HMRC questions.

Why would I move?
* Sleep better (really, sometimes I just get these vibes that I'm doing something wrong, reading about IR35 all night, going to sleep at 2 AM).
* Want to get a mortgage

[jamesbrown]

A mortgage is a separate issue, obviously.

Anyway, you are probably increasing your risk somewhat by entering an employment relationship with your erstwhile client. Why weren’t you an employee all along?

[jamesbrown]

( That said, I’m not sure whether a PEO is materially different than an umbrella in that regard - what you should avoid is an employment relationship with the client. In short, you are probably overthinking and may end up increasing your risk. )

[dogeson]

( That said, I’m not sure whether a PEO is materially different than an umbrella in that regard - what you should avoid is an employment relationship with the client. In short, you are probably overthinking and may end up increasing your risk. )

Yeah, it does feel that way (i.e. employment), but if the WPs change. Say, if I go employment, there are stipulated hours in the contract, bank holidays, SSP, pension etc. + employement rights. Thus I can state that I'll be subject to more control, and there's more MOO from the client side, no RoS, which I think are big changes to my current WPs. Thus, my relationship with the client changes.

[northernladuk]

Yeah, it does feel that way (i.e. employment), but if the WPs change. Say, if I go employment, there are stipulated hours in the contract, bank holidays, SSP, pension etc. + employement rights. Thus I can state that I'll be subject to more control, and there's more MOO from the client side, no RoS, which I think are big changes to my current WPs. Thus, my relationship with the client changes.

I don't think you are understanding MoO. More would indicate there is some already?

I'll bet everything I've got if you go perm your WP's won't change at all which speaks volumes. RoS isn't really a working practice is it.