I have been following your newsletter and meaning to get in touch for a while. I am one of the many small business operators in the IT sector who emigrated in recent years due to IR35 changes and ever-increasing taxes even while staying outside IR35.
Obviously, when working for clients outside the UK, while being a tax resident outside the UK, IR35 does not apply, but what is far more interesting and noteworthy is a document (see below) I recently got a copy of, which I’m told HMRC shared in an IR35 webinar last year.
What it effectively seems to show is that emigrating, becoming a tax resident elsewhere, and then taking on a remote working contract (and over the past 2 years most IT jobs have been remote, and this trend continues), automatically puts the assignment outside of scope IR35.
It effectively means that companies can hire no-rights employees from abroad as contractors with impunity while having to jump through many IR35-related hoops if wanting to hire a UK-based contractor instead, and then still risk protracted investigations years later. But if hiring a contractor based abroad, both the difficulties and the risk disappear entirely.
For me, emigrating just before Brexit was an easy decision because fewer than 20% of my clients and less than 10% of my business’ revenue were from the UK, especially since there are countries in the EU with taxes that are 2 to 5 times lower than in the UK (for example, 10% flat rate corporation tax, 10% flat-rate income tax, 5% flat rate dividend tax).
But what I found shocking was that having emigrated, it seems that, quite absurdly, I would actually have preferential treatment from prospective UK-based clients when it comes to contracts that would be considered inside IR35.
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