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IR35: Are you aware that IR35 can still apply when working outside of the UK?

Posted-on February 2021 By Amy Bates

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​40% of people we asked said they were not aware that IR35 can still apply when working outside of the UK.

Contractors who are going through a UK based limited company and who are a UK resident, IR35 still applies to them, no matter where in the world they are working. The country where their duties are performed has no bearing in IR35. When a contractor does their assessment, and it comes back as being inside IR35, they are required to calculate and pay tax and NI even if they are working on an offshore platform.

However, one thing to bear in mind, is that both offshore and onshore contractors should be making social security contributions to the state in which they are working, no matter of IR35 status. (They would continue to do this and deduct the National Insurance Contributions (NICs) element from the IR35 contribution.)

HMRC has tightened its rules with regards to tax residency. You can no longer spend a set number of days outside of the UK. HMRC will now look at the contractors' ties to the UK. For example, family or UK registered/trading company. The more ties a contractor has, the more likely they will be classed as a resident in the UK even if you do spend most of the year out of the country.