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Hi! Question from non-UK resident working for a UK company

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    Hi! Question from non-UK resident working for a UK company

    Some further questions in post #7

    Hi guys! I've just registered and thought that this forum may be a best bet for some of my questions. First, let me introduce myself and give you some background of my situation.

    I'm a web/software developer from Poland who recently got hired on a permanent basis by a UK company to work remotely from Poland. I received a fairly standard British contract of employment with one significant difference - my whole gross salary is transfered to my bank account and as a Polish resident I'm legally obliged to pay all income taxes and national insurance to Polish authorities in obedience to Polish law. There are no deductions done on a British side.

    Before getting hired by this UK company I used to be (and I still am, in fact) self-employed in Poland, doing all my IT work as a contractor. Not a typical freelancer - those were in fact standard 40h/week jobs, just billed as a B2B service with standard VAT invoices. This is completely legal in Poland. We don't have such strict regulations as British IR35 and almost everyone who's salary is significantly above national average becomes a contractor at some point because of huge tax benefits of such move.

    When negotiating with my current employer I've raised a question if it is possible for me to be hired as a contractor and the answer was 'no', however they failed to give me a specific reason (they said something vaguely about all people there being permanent etc.). Recently I've learned about British IR35 regulations and I think this may be a real reason. I would like to renegotiate my current situation and try to convince my employer to allow me to become a contractor as this will increase my income thanks to reduction in tax and national insurance amount I'm required to pay (it will result in ca. 1000 pounds per month more in my pocket - huge difference).
    I know how B2B contracts for EU residents work. I had an opportunity to do some freelancing work both for British and German companies with me residing in Poland. The only requirement is that both me and a client company are registered as EU VAT payers. After completing my work I issue a VAT invoice with a 'reverse charge' of VAT. This in theory forces my client to pay the VAT, but in practice it is cancelled, as they can deduct it from their own taxes.

    So my questions are:
    1. Am I right that as a Polish tax resident I don't fall into IR35 (there are no similar regulations in Poland)?
    2. Are there any other things or regulations I didn't account for in my calculations?
    3. What would you, as people better versed in British employment regulations, recommend to try to convince my employer to such change?

    Thanks for reading and have a splendid day!
    Last edited by witmann; 8 October 2016, 17:27.

    #2
    Could be a whole host of reasons....

    Your Polish LTD won't be on their PSL
    They can't be arsed to look in to tax law. In the UK if you are self employed and don't pay your taxes liability passes to the client so it's a no go here.
    They've got you on the books, there is nothing in it (but risk) to change it.
    They want an employee, they've got one. Changing the model to suit you will have every single employee wanting it as well so it will never wash.
    I doubt IR35 is the real reason but the complexity over tax might be but if they want employees they get employees.

    A negotiation means two sides have to give something up to get something they want. There isn't any benefit to the client doing this. I'd say you are going to have to suck it up rather than you wanting your cake and eating it.
    'CUK forum personality of 2011 - Winner - Yes really!!!!

    Comment


      #3
      Thanks for your answer northernladuk.

      Originally posted by northernladuk View Post
      Your Polish LTD won't be on their PSL
      Could you elaborate? I'm not familiar with that acronym.

      Originally posted by northernladuk View Post
      They can't be arsed to look in to tax law. In the UK if you are self employed and don't pay your taxes liability passes to the client so it's a no go here.
      I believe taxes in B2B relations are much simpler than standard employment - they get an invoice, they pay it and put it in expenses - that's all. No need for taking care of National Insurance, proof of taxes paid in Poland and other cumbersome accounting involved in hiring a permanent employee. They already had and still experience difficulties of hiring a permanent employee who is not a resident and citizen of UK. Lots of things to account for.
      In Poland hiring someone as a contractor is considered to be a win-win situation (if a person wants to be hired as a contractor - some prefer being permanent) so I hoped for a similar approach in UK.

      Originally posted by northernladuk View Post
      There isn't any benefit to the client doing this.
      I wouldn't say that there isn't any benefit for them - simpler accounting (ok, that's my guess) and a happier employee (which is an important thing on an employee-centric market like in IT, I believe)

      Comment


        #4
        You can believe what you want but your employer will have looked into employment law and decided they want a permanent employee. If you don't like the set up find another company to take you on.
        "You’re just a bad memory who doesn’t know when to go away" JR

        Comment


          #5
          Originally posted by witmann View Post
          Thanks for your answer northernladuk.


          Could you elaborate? I'm not familiar with that acronym.
          Preferred Suppliers List. It's unlikely they will engage with any old company without going through some sort of vetting.
          I believe taxes in B2B relations are much simpler than standard employment - they get an invoice, they pay it and put it in expenses - that's all. No need for taking care of National Insurance, proof of taxes paid in Poland and other cumbersome accounting involved in hiring a permanent employee. They already had and still experience difficulties of hiring a permanent employee who is not a resident and citizen of UK. Lots of things to account for.
          In Poland hiring someone as a contractor is considered to be a win-win situation (if a person wants to be hired as a contractor - some prefer being permanent) so I hoped for a similar approach in UK.
          Not going to be simpler than engaging and employee of which they have a lot and have established processes.

          I wouldn't say that there isn't any benefit for them - simpler accounting (ok, that's my guess) and a happier employee (which is an important thing on an employee-centric market like in IT, I believe)
          You won't be an employee. You will be a supplier. You'll have different T&Cs and dont have to have appraisals etc. The fact you are different to everyone else isn't going to work very well.
          Last edited by northernladuk; 3 July 2016, 13:09.
          'CUK forum personality of 2011 - Winner - Yes really!!!!

          Comment


            #6
            Ok, understood. Thank you for your help.
            Cheers!

            Comment


              #7
              Hello again!

              The company I work for tentatively agreed to change my status to a contractor, but before they do that they want to investigate all the legal and tax implications of this move. As it is in my best interest for them to do that as quickly as possible, I would like to help them by gathering some information. So I came back to ContractorUK with some new questions.

              As a reminder - we're talking about the situation where I perform IT work 100% remotely from Poland for a UK company. I'm self-employed in Poland (not LTD, just a standard one-man business). I know everything I need to know about Polish law nad taxes, so I'm asking about the UK part only.

              1. Are there any specific steps that need to be taken to allow me to work as a contractor for the same company, which hired me previously as an employee?

              2. Does the company need to prepare anything from the legal/tax point of view to be possible to hire foreign contractors apart from making sure that they have an EU VAT number?

              3. Assuming that my contract will be prepared correctly, with the CUK guides in mind (IR35 tests and Contractor checklist) do I still need to worry about IR35 as a foreign resident with no formal business in the UK? HMRC website is not 100% clear about that.

              4. Is there anything else we should know about or consider before and after doing the switch?

              Thank you!

              Comment


                #8
                No idea about the tax status but you've given up your employment rights so you can be binned in the spot now.

                Who is providing the new contract between the two of you?
                Last edited by northernladuk; 8 October 2016, 17:43.
                'CUK forum personality of 2011 - Winner - Yes really!!!!

                Comment


                  #9
                  I know about the risks of contracting, as that's what I've been doing in Poland before getting hired by the UK company, so no stress here.

                  There was no conversation about the contract itself yet, but I believe we will work on it together with the company's Head of IT and accountants to make sure that both parties are satisifed.
                  Last edited by witmann; 8 October 2016, 17:54.

                  Comment


                    #10
                    The main issues are on the employers side not yours.

                    In theory you could have employment law claims over them changing the contract which you could challenge in a Polish court using the relevant EU directives.

                    HMRC won't care as all your taxes should be paid in Poland anyway.
                    "You’re just a bad memory who doesn’t know when to go away" JR

                    Comment

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