Employee to move to Isle of Man

Employee to move to Isle of Man

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An employee, who has worked remotely for a UK employer is moving to Isle of Man. Upon the move, while still doing essentially the same job, he intends to be self-employed. Would the usual employment status tests still be relevant for the employer?

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By SThornton
01st Sep 2014 16:15

You would be best...

Consulting the IoM government website and maybe even calling them. IoM can be a tad odd.

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By andy.partridge
02nd Sep 2014 10:08

Confused

One or both of us, that is.

The question isn't being asked of IoM government. The question is can HMRC apply employment status tests to a UK company employer regarding a UK employee moving to IoM?

Or, does the employee's move to the IoM put the issue outside of HMRC's scope?

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By SThornton
02nd Sep 2014 10:53

I think

that even if he were to remain an employee, you may need to set up an IoM payroll. If he is to go self employed, it would probably under IoM gov rules and not HMRC. But then again I'm not an expert on IoM rules and have only previously run an IoM payroll and nothing more.

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By johngroganjga
02nd Sep 2014 11:04

I think the question comes down to what are the PAYE responsibilities of a UK employer in relation to a non-resident employee (i.e. are they any different from those that apply to UK employees, which of course we are all familiar with).

I confess I don't know the answer to that question, but it seems to me that that is the one that unlocks the conundrum.

For example if the answer is that non-resident employees are outside the scope of PAYE, the individual's employment status doesn't come into it (from the UK point of view at least). I agree with the above that the possibility that the employer might have to apply IOM ITIP (as I understand they call their PAYE) should not be overlooked.  On the other hand if the answer is that all employees of UK companies are within the scope of PAYE regardless of their tax residence then nothing changes.

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By andy.partridge
02nd Sep 2014 11:15

Employee's intention

The employee's intention is to commence self-employment with his (to be former) UK employer as his sole client, but essentially doing the same job.

The angle I am trying to explore is can the UK employer accept that without fear of an HMRC challenge to the status?

I guess John is saying that if employees are within PAYE regardless of residence then the employer is liable to the same status tests.

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By johngroganjga
02nd Sep 2014 11:24

Yes that's what I'm saying.

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Euan's picture
By Euan MacLennan
02nd Sep 2014 12:26

Not resident in UK

If an employee is not resident in the UK for tax purposes and does no work in the UK, he is not subject to UK income tax or hence, to PAYE, on his earnings from his employment.

If a self-employed person is not resident in the UK and does no work in the UK, he is not subject to UK income tax on his self-employed profits.

In the circumstances, I cannot see any obligation on a UK employer to assess the employment status of a non-resident worker who does no work in the UK.

 

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By johngroganjga
02nd Sep 2014 12:37

And an employee who works remotely from his employer, presumably, for this purpose is deemed to work where he is physically located when he works rather than, say, at the business premises of the employer from which he is supervised?

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By daveah
04th Sep 2014 21:50

Isle of Man tax office.
Isle of Man tax office will be able to give you some assurance. No IR35 in the IOM, but try giving them a call on 01624 685400 and you get to speak to a tax officer who will transfer you to their relevant colleague.

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