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Foreign Employer NI contributions

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I'm about to start working for a company based in Malta that has no UK presence or offices and I will be their only UK based employee.

From a contract perspective I will be officially a contractor with no employee rights. However the actual working conditions are very much employer/employee e.g. sick/holiday pay, travel expenses, training etc. This arrangement is to simplify their paperwork and allow them to hire from any country and the employee handles their own taxes.

My issue is I cannot figure out what actual tax and NI I am liable for. My working relationship seems to put me directly in a "disguised employment/IR35" situation if I operate as a sole trader or limited company.

What potential routes are there for me given such a situation and will I/they be liable to pay employers NI contributions as well as my own?

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By WhichTyler
18th Oct 2019 09:00

Sounds like you need to set up a DPNI scheme, where the employee operates PAYE rather than the employer

https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye20100

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By David Heaton
18th Oct 2019 18:28

If flying solo, rather than in your own personal service company, you are not in disguised employment: you're either an employee or you're self-employed. All the IR35 rules are irrelevant. Your wording makes it sound like the only thing missing from your relationship is a written employment contract, so let's assume you are legally an employee, whatever your contract for services says. If you're not, it's SA and Class 2+4 NIC.

While we remain under EU rules (if there's a deal, until December 2020 under transitional rules; if we revoke Art 50, who knows ...), the Maltese employer is liable for secondary NICs as well as collecting and remitting primary NICs. It needs to appoint an agent to run an NI-only scheme and do the RTI submissions. No PAYE is due where the employer has no presence in the UK, so the income tax is a self-assessment matter.

If you set up a PSC, MaltaCo can pay your PSC invoice and leave your PSC to handle the PAYE & NIC through its own payroll. The new rules from April 2020 will then catch you if MaltaCo is not 'small' in Companies Act terms, but with MaltaCo having no UK presence, it simply means the PSC has to operate PAYE and NIC on any earnings it receives under an IR35 contract. Your PSC invoice to MaltaCo needs to add employer NICs to the 'wages' fee.

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Replying to David Heaton:
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By iancal
18th Oct 2019 18:52

Thanks for the guidance.

The contract I have clearly indicates I'm a self employed contractor and revokes any liabilities it may have had as an employee.

If I go down the sole trader route and pay class 2+4 NIC and income tax. Is there potentially any kickback from HMRC for employers NIC contributions. Purely because I will be treated like an employee in nature i.e holiday pay, travel expenses etc?

I know they go down that route for IR35 but it's not really clear if they are likely to dispute a sole trader where arrangements are "employee/employer" in practice.

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