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Client moving overseas

I have a client, employed as a civil servant, who has bought a property overseas and will be moving

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Quick one.

I have a client, employed as a civil servant in the UK, who has bought a property overseas and will be moving there permanently in the near future.  The destination is Jersey. 

Client intends to continue the employment (full time) as the role is mostly home working.  Client will visit the U.K. 1-2 days per month (within the limits for non resident workers).

Employer is stating that whilst they do want to continue to employ the client, they would not be able to continue to pay them under PAYE, and that the only possible way to continue the relationship is by the employer contracting the worker, possibly via a company.

I am struggling to see what the issue is.  As far as I'm concerned, PAYE can still be operated, albeit via an NT tax code (I believe HMrC will issue an NT tax code once they are satisfied the client is no longer resident).

Can anybody see why PAYE would not be possible?

 

Replies (9)

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By Wanderer
28th Jan 2021 03:49

Is the issue that the employer may be required to operate Jersey (equivalent of) PAYE?

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By Tax Dragon
28th Jan 2021 07:02

Is your silent "therefore" maybe back to front? You've written it as "we can't operate PAYE, therefore we can't employ you". It's much more likely to be "we can't employ you, therefore PAYE will not be in point." Is there an international convention that says national governments won't operate in other jurisdictions? (Outside of embassies and spy rings.)

But I love questions like this. Seriously, what are you going to do? Civil Service: we like you Giles, but we can't employ you once you move to Jersey." Giles: "I checked that with my accountant. He says you can. And he confirmed it on Aweb so it must be right."

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By Wanderer
28th Jan 2021 07:30

Tax Dragon wrote:

But I love questions like this. Seriously, what are you going to do? Civil Service: we like you Giles, but we can't employ you once you move to Jersey." Giles: "I checked that with my accountant. He says you can. And he confirmed it on Aweb so it must be right."

So true.
Reminds me of many conversations with clients in the Film & TV industry back in the day.

Client: "They are saying that I have to be self employed."
Wanderer: "Well according to the HMRC film industry guidance notes I would err to the side that your particular position is that of an employee."
Client:"That's good, I'd prefer to be an employee, I'll tell them that's what they have to do."
Wanderer: "Well you could do that, but do you want to work or not, possibly we should consider running with what they say?"

No doubt many are currently having similar conversations with regard to the off-payroll working rules.

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By Manchester_man
28th Jan 2021 15:29

Hi. Yes, I know, I totally agree! However this client is not the type to roll over and accept no for an answer from the employer (trust me!).

Client’s reason for asking was that they want to “present a solution to the employer”.

All I can do is answer the question as best I can and I believe that, if the employer
a) wanted to and
b) was not precluded from doing so due to other, non-tax rules
Then they ‘could’ employ / but to employ under PAYE.

Im now wondering now, although the work is for a U.K. company, the work is to be physically carried out in Jersey. Does that necessitate Jersey PAYE?

I’m probably going to tell the client to keep it between them and the employer, but I’m interested to know nonetheless, as this is a bit of a new one on me.

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By Tax Dragon
28th Jan 2021 16:52

I'm not sure I understand.

What happens happens; tax follows along behind. (PAYE is a set of tax rules that can apply to employment; it's not employment law and it doesn't define whether or not someone is an employee.) Now it may be that the Civil Service either cannot employ people overseas or has a policy not to because it doesn't want to have to consider non-UK tax rules. I don't know, I'm just guessing. They have "presented a solution to the employee" - he contracts (or sets up a company) and takes on the admin. He probably needs to be taking advice in Jersey at this point.

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By Moo
01st Feb 2021 10:32

Mmmm. Sure to be someone in Jersey who can offer a tax efficient 'solution' probably involving loans or EBTs or something of that ilk.
Or maybe it's just 1st of Feb and I'm feeling a bit cynical and tax weary.

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By pmt1pff
01st Feb 2021 11:25

hi, think you already have an answer, but this issue came up for me recently so thought i would reply anyway.

as others have said, as client is working in Jersey for the forseeable future, technically correct position is that jersey has primary taxing rights over the income he earns from his work there. you cant collect this via PAYE so need a jersey based solution. could be an outsourced payroll, or an umbrella type arrangement or setting up a local PSC.

we couldnt find a local umbrella though i am sure they must exist. our client didnt want a PSC. outsourced payroll ended up being the only option. the hirer registered as an employer in jersey and a third party firm calculates payroll and tells them what to pay.

doubt civil service would want this faff. plus if they carry on employing him then there may be continued NIC for a year, though i am not an expert.

in practice if civil service put this worker through an intermediary to manage, who then continued to opearte UK PAYE would this get picked up? who knows. but jersey tax might be lower anyway. plus presumably you would be advising your client as to residence and impact on where tax returns are submitted.

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By Rod Wilson
01st Feb 2021 12:23

Article 14 UK/JERSEY double tax treaty. Salaries are taxed in the territory where the employment is exercised. That would be Jersey in this case.

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By grecianwebb
01st Feb 2021 20:09

The treaty does not say that though.

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