The 6th April 2021 has been and gone and we’re now into the 2021/22 tax year. This, of course, means that the private sector IR35 reforms are here and they now apply to all contractors engaged with medium or large end clients. Despite the new legislation now being in effect, many of you still have questions that need answering and so Andy Vessey, Kingsbridge’s Head of Tax and one of the UK’s foremost IR35 experts, is continuing to answer your questions throughout the month.
So, perhaps you’ve been wondering what the effects of moving abroad to live with your partner would be, or maybe you’re concerned about a client’s desire to introduce new agreements, perhaps you just don’t know whether or not IR35 affects you. Andy tackles all of those issues this week so read on to find out more.
I’m currently living in the UK and have been freelancing off and on since 2017, with periods of travel. I’m also UK-based for tax purposes and have been looking at the IR35 implications over the last year or so. I have a Swiss girlfriend and we are discussing me re-locating to Basel (part-time) and continuing to working as a freelancer, returning to the UK as and when required. Would this be a favourable option with respect to IR35? I would continue to work from home in Basel and set myself up as a full sub-consultant rather than just a freelancer.
I understand the tax issue is a separate issue but I would be interested to hear your thoughts on the IR35 implications.
If you become a non-UK resident for tax purposes under the Statutory Residence Test then IR35 should not be an issue. You would have to be careful on the number of days you returned to the UK though.
If you remain a UK resident in spite of carrying out the work in Basel, then this may help in demonstrating that some of the control in the manner in which you deliver the services rests with you, but you or your end client, if within the scope of the off-payroll rules, would still need to consider all the regular tests of employment status to determine whether or not IR35 applied to your contract(s).
My client has determined me as outside IR35 using the HMRC tool, which is good news, but wants to put in place a separate Services Agreement that details the services I am to deliver, deliverables, acceptance criteria and dependencies etc. I currently engage via an agent who engages via a contingent labour supplier who, ultimately, has the contract with the end client. This Services Document is between myself (not my limited company) and the end client. I have many concerns that I am not protected by the terms I have with my agent as there is no privity of contract for the Services Agreement and could, therefore, be open to offering unlimited liability, personal obligations as opposed to my limited company etc. What are your thoughts?
Unfortunately, I cannot comment on the legal issues you have raised and you, therefore, need to seek separate legal advice. From a tax perspective, however, you need to be sure that such a personal agreement doesn’t affect aspects of your employment status, e.g., personal service and mutuality of obligation. However, as your end client has determined your status as being ‘outside’ IR35 hopefully they have already considered this.
I have a Spanish contractor, based in Spain, who is contracting for a client of mine in the UK. The client has just deemed all of their contractors to be inside IR35. Would this be the case for my Spanish contractor or, because he is overseas, would IR35 not affect him?
If the contractor is a non-UK resident for tax purposes then ESM10025 states that a client does not need to consider whether the off-payroll rules apply where there is no liability to tax and NICs in the UK.
How to Ask Andy…
There’s still some time to ask Andy your IR35 questions as we continue through April. So hop on over to our Ask Andy form and send yours in. Andy will do his best to answer right here on this blog.
Perhaps your worry is your status determination and you’d like to check if you’ve been assessed fairly by your end client. If so, for just £50 plus VAT you can get an instant, accurate determination from the Kingsbridge IR35 Status Tool. Developed by Andy, it asks carefully worded yes/no questions to garner a full view of your contract and working practices. Once complete, it offers you an inside or outside determination alongside a comprehensive report. And, if your case is borderline, it passes it over to one of our in-house IR35 specialists for review, giving you a determination you can be confident in.
