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"Employee" of a foreign Company

"Employee" of a foreign Company

I wondered if anyone could help. I have come across a person who is an "employee" of a company which is based in India. The work undertaken is done from the UK and this person is UK resident and domiciled. The payments are made to this "employee" are paid without any deductions of tax or NIC and the person is registered with HMRC to complete a tax return but has no idea how to enter this income.

Has anyone encountered this before? Apparently when she spoke to HMRC they didn't have a clue what to do with her either.

Should the Indian company have registered as an employer in the UK? Or should she just treat the income as income from self employment? In which case would this create IR35 complications as this is  the only income she receives.

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By Duhamel
26th Feb 2016 13:37

I'd consider a DPNI scheme
If she is genuinely employed. See:
http://www.hmrc.gov.uk/manuals/pommanual/paye20100.htm

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26th Feb 2016 13:42

Unusual situation, but not completely unheard of.

Answering your last question first, IR35 won't apply to her as it only applies if she is offering her services through a personal services company.  If she's being paid in her persona name, then ignore IR35.

DPNI as duhamel states appears the best fit. http://www.hmrc.gov.uk/manuals/pommanual/paye20100.htm

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