IR35 and Clients Abroad

(2 minutes to read)

With the recent changes made to the IR35 legislation, contractors may find themselves unsure of what this means for them if they’re working for clients who are based abroad.

What is IR35?

An IR35 status is based on your level of risk, liability and responsibility as a worker, which will determine whether you fall ‘outside’ or ‘inside’ the legislation.

Your status will impact the amount of tax and National Insurance Contributions you pay, as well as whether you are eligible to claim back on certain expenses – if your contract shows that you work as a contractor should, then you will be classed as being ‘outside’.

If, however, your working practices are shown to be similar to that of a permanent worker, then you will fall ‘inside’ and will need to pay more tax and NICs than a contractor deemed as ‘outside’.

For more information on the guidelines surrounding the legislation, read our IR35 Rules page.

Latest IR35 changes

The most recent IR35 changes came into effect from the 6th of April 2021, meaning that the legislation now impacts those working in both the private and public sector. It also means that the responsibility to place a contractor ‘in’ or ‘out’ of IR35 is now on the client to decide, when previously, it was the contractor.

This has created issues for many self-employed professionals with some clients choosing to ‘blanket-assess’ all of their contractors as being inside IR35 so as to avoid making the incorrect assessment (and therefore a penalty charge).

What if my client is based abroad?

Some self-employed professionals will be left wondering how these changes will impact them if they’re contracting for clients who are overseas, as it could make the process of obtaining an IR35 Status Determination Statement (SDS) quite difficult.

For many end clients based abroad, the IR35 legislation may not be something that they’re familiar with, hence the concerns from contractors trying to obtain one.

This issue was noted by the government, and as a result meant that as long as the client based abroad had zero UK connections (such as a UK branch or office), the contractor could go back to the old rules of letting them determine their own status.

What is a confirmation of Arrangements?

If you believe that your working practices are deemed as being ‘outside’, HMRC may ask for evidence to prove this.

This is where a Confirmation of Arrangements document could help to overcome an IR35 status issue. It will need to be drawn up by your client, detailing your role and the level of risk, liability and responsibility that comes with it.

If a client seems unwilling to sign the paperwork, it may be worth pointing out that it is not a legal document, and it may even be in their best interest to have this in place as it could minimise their involvement should HMRC carry out an investigation.

We hope you found this page helpful. If you have any further questions, our team of experts are available to answer any queries, so give us a call on 01442 795 100 or email jaime.thorpe@dolanaccountancy.com.

You may also like to read

IR35 and Sole Traders

What is IR35? IR35 is a legislation aimed at putting a stop to ‘disguised employees’ – preventing workers from benefitting from ...

Read More

Using your Limited Company when inside IR35

What is IR35? An IR35 status determines the amount of tax and National Insurance Contributions (NICs) a contractor will need to ...

Read More

IR35 2020 Changes

Private sector IR35 changes in April 2020 UPDATE 18/03/20: Last night the Government announced that due to the ongoing Covid-19 situation, they ...

Read More

Why Dolan Accountancy?

Dolan Accountancy was set up by Simon J Dolan, the man behind the well-known brand SJD Accountancy. With over 25 years experience in the contracting marketing, Dolan Accountancy has the heritage, reputation and credibility you can trust. Working closely with our sister company, Contractor Umbrella, it means we can offer one low cost, fixed fee package at £105 + VAT per month. This gives you the flexibility of using both our Limited Company Accountancy Services and our award winning Umbrella Service, for one inclusive cost. We don’t believe in tiered packages or hidden extra fees, instead we aim to give you everything you need, including:

  • Free Company Formation – This is where it all begins. Once you have decided on an available name, we will form your company free of charge (if using our accountancy services) and it will be ready for you to use in as little as three hours.
  • Free use of Contractor Umbrella – With changes in Public Sector IR35 Legislation we understand that sometimes you are required to contract via an umbrella company. We will keep your limited company ticking over, while you work margin free via our sister company, Contractor Umbrella.
  • A Dedicated Accountant – Your accountant will be there for any company or personal tax advice that you require. We will never outsource work, even to internal teams.
  • Free Access to FreeAgent – The founder behind the multi award winning FreeAgent platform was one of Simon’s first clients, therefore it only seems fitting that we offer all of our clients access to FreeAgent, free of charge.
  • Free Business Banking – We have decided to waive our commission so our clients can use Tide free of charge for the first year.
  • Unlimited IR35 Status Reviews – We will review all of your contracts for IR35 purposes and provide you with our professional opinion as to its status.
  • Free Registered and Director’s Service Office Address – Sometimes you just don’t want your home address on display at Companies House. When you sign up to our accountancy services, we will offer the use of our address as an alternative.
  • Your Business and Personal Taxation Needs – This includes Company Accounts, Director’s Personal Tax Return, VAT Returns, Payroll, Corporation Tax and Dividend advice, to name just a few.
  • Same day payments- We offer same day payments as standard providing funds are received into our account by 9am, for no additional fee.

If you’d like to find out more about how Dolan Accountancy can help you and your business, please give us a call on 01442 795100 or email sophie.lewis@dolanaccountancy.com or jaime.thorpe@dolanaccountancy.com.

dav1