The impending Off-Payroll Rules that will come into force on the 6th April 2020 have caused concern and fear in the Contracting sector. The volume of comment on the implications has been tremendous. However, there has been very little said on how these changes may affect clients, contractors, recruitment business and Umbrella companies where there is an international element involved. Today, the Treasury revealed the results of their review on the implementation of these rules and we draw your attention to this clause:

Section 4.15
During the review concerns were raised about how the rules will apply where the client is overseas. The Government has listened to those concerns and will amend the legislation to exclude wholly overseas organisations with no UK presence from having to consider the off-payroll working rules. This means the existing rules for engagements outside the public sector will continue to apply to engagements where the client is wholly overseas, and the individual’s limited company will continue to determine the status of the individual.

From this, we can see that where the client is abroad, the determination of employment status will continue to be made by the PSC and not by the client or the recruitment business. The statement is the first official Treasury announcement that HMRC will be satisfied that contractors use their limited companies to work, where the client is outside the UK.

While this is excellent news from the UK tax liability perspective contractors, recruitment business and their clients all still need to be aware of the local compliance requirements in the work country. They must be vigilant in terms of immigration, tax and social security law. Recruitment business must also be alert to their not breaching the Criminal Finances Act 2017 by facilitating tax avoidance in the work country.

Here are excellent reasons for you to contact AF to talk about our Employed, Self-employed and Localized Limited Company solutions for working abroad.

You can read the full text of the Treasury review here: