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Sam, Accountant
Category: Tax
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Have been an employee for Company A for 17 years. Company

Customer Question

Have been an employee for Company A for 17 years.

Company B wants me to work for them, they are based in Norway, I am based in UK, we are agreeing terms of engagement. They want me to be an employee, however to pay tax in the UK and not in Norway want me to invoice them for my time. I will be working from home, 208 days a year [ 4 day week ]. I have a Brokers agreement with Company C in Germany, it is just about to pay out based on an 'introduction' and have a similar arrangement with Company D in France.

What is most tax efficient way to deal with this, too much info and advice on the internet.
Submitted: 3 years ago.
Category: Tax
Expert:  Sam replied 3 years ago.

Thanks for your question, my name is Sam and am one of the UK tax experts here on Just Answer.

Lets look at each situation.
As the Norwegian company want you to work and pay tax in the UK- you will in essence become a subsidiary employer, so will have to arrange with HMRC to set up a direct PAYE scheme, so you van operate tax and National Insurance deductions from your own pay.
I have added a link here for you to do this.
and then you will ask for s direct payment scheme to be set up. They will advise you how to operate the new Real Time information process, but there are also free HMRC workshops that you can attend.

As far as the broker fees are concerned, you can can either
1) take the income which you will then declare to HMRC (through a self assessment tax return, so if you do not already complete one or
2) if this is likely to be an on going position, arrange to set up a limited company, however I will advise depending on the amounts you are to be paid, a limited company could provide more costly, as you have corporation tax to pay and lose 10% (so just draw a net amount) after corporation tax has been suffered,, to ensure that are sufficient profits available, and the accountancy fees wipe out any potential tax savings and there are many tax obligations to meet.

So I would suggest option 1 -

Do feel free to ask any follow up questions


Customer: replied 3 years ago.



Would it not make sense to set up a limited liability company and present the Norweigan company with a contract for services ?



I am hoping to have a 208 day contract, those days delivered at my discretion throughout the year under my control.


Then invoice them on a daily rate ?


The company I have then set up has 2 customers, the company in Norway who buys my time and the Germany who only pays on success { have invoiced them £ 45 K and payment due now }.


The Norway company will be invoiced for circa £ 100K a year


I then have 2 other companies who are success fee only.


Does all this fall outside IR35, as the Norweigan company I have not worked for previously, I dictate pretty much my working pattern, work from home, charge a daily rate etc and the other 3 companies are clearly self employed business oriented ?


I suppose the question is, can I put it all through a company like my accountant is suggesting and ignore IR35 as I have more than one customer and HMRC find it very difficult to police and I would not turn up in any UK PAYE audit ?

Expert:  Sam replied 3 years ago.

Thanks for your response and further questions.

I am afraid you will be in breach of the IR35 - as whilst the payments for the broker deals could be operated under a limited company the payment you are receiving for on going work from the Norwegian company, does have leanings towards self employment, you are without doubt going to be an employee - due to the work you do for them, the regularity - and I am shocked your accountant would suggest otherwise - is he going to stump up the costs for penalties and failure to operate PAYE, as you are still at risk of audit as any other limited company. Personally I would never offer this advise to my clients, but it boils down to whether you wish to take that risk.


Customer: replied 3 years ago.



IR35 seems to be a complicated subject, to comply with the requirements would appear to require setting up a business with contracts of engagement that no client would ever contract with.


What are the key 'fails' on IR35 I need to know about, I am writing the Norweigan contract currently and can engage / contract [ with some negotiation ] to fall outside IR35.



The contract as written would not be disguising myself as an employee, no rights as an employee, no working hours, no set working days, I provide the equipment, working from home, claiming disbursements only etc



Expert:  Sam replied 3 years ago.

Thanks for your response

The main failure is that you are working as a representative of the company, perhaps you could advise the role you will play and how you will undertake the duties of that role and I can advise further

Customer: replied 3 years ago.



The company has 3 lines of business, in one line of business they operate only in scandanavia and want me to run business development outside scandanavia.


I am not interested in being a traditional employee, as my previous employer flogged me to death, so working from home on a reduced number of days contract is appealing.


Their 'control' over me will be highly limited as will be running my own workload, working patterns and travel plans.


Substitution will be impossible, mutuality of obligation not so difficult.


Under which IR35 ruling would 'working as a representative' fall foul of IR35, I would have a their business card but could say consultant on it.

Expert:  Sam replied 3 years ago.
Thanks for your response

And what is entailed within running this business development ?
Its not just how you work under your own time frame, and what hours you chose to work, the fact that you would have their business card, immediately lends you to working for them (as opposed to this being for yourself)
Will you work solely with the customers, or be a go between them and the company, with you work on commission only. Will they introduce leads to you, or will this be undertaken by your own contacts -