OFF-PAYROLL RULES FOR CONTRACTORS WORKING FOR UK SUBSIDIARIES
A number of contractors have asked whether the off-payroll rules apply if you work for a small UK subsidiary of a large international company.
“They certainly would,” says Chris James, Director of Accountancy Services here at JSA and Chairman of the FCSA. “Even if the UK arm of the business is ‘small’ according to HMRC’s criteria, the off-payroll rules would still apply if the subsidiary you are working for is part of a bigger group, even if that bigger group is based overseas.”
Confusion has arisen because the reforms to off-payroll rules in the private sector do not apply to small businesses. Whilst the issue is still being clarified, HMRC’s definition of a ‘small’ company is that it must meet 2 or more of the following criteria:
- Turnover – not more than £10.2m
- Balance sheet total – not more than £5.1m*
- Number of employees – no more than 50
*NB: this means the assets on the balance sheet before deducting liabilities, not the net balance sheet total.
Do the new rules apply when working overseas?
We have also been asked by a number of contractors whether the new rules would apply when working overseas.
“If you’re a UK tax resident, then this law will potentially apply to you. And it’s even more complicated if part of the supply chain crosses international borders,” says Chris.
Are you affected by the off-payroll reforms?
If you are not sure if or how the new rules would apply to your particular circumstances, it’s important to start looking at the issue now as this could have serious implications for compliance and tax. For information and guidance on any aspect of the reforms and the options available to you, please contact a member of our team. Our accountants will be able to provide information tailored to your specific circumstances.
Listen to our webinar
Chris discussed the small business exemption, overseas working and a range of other issues on our recent off-payroll webinar for contractors. You can listen again here.