4th September 2020
As a leading expert on international contractor compliance, the 6CATS International team is well aware of the trends that impact professionals across borders. And while the spotlight has firmly been on Covid-19 in recent months, there are lots of developments in the world of tax compliance that contractors need to be aware of to ensure they remain compliant when working overseas. This is particularly the case as we edge closer to the end of the Brexit transition period on 31st December. Those of you that read our blogs regularly will know that we recently provided an update on the latest developments. However with things changing rapidly – relating not only to Covid-19, but also Brexit, our CEO, Michelle Reilly, spoke to Contractor UK about the future of contracting in the ‘new normal’. Here’s what she had to say on the subject.
2021 is not far away but some key areas affecting international contractor compliance still remain unclear
While the 31st of December may not seem far away, when it comes to potential changes to the usual tax and compliance frameworks when the Brexit transition period comes to a close, there is still a lot that needs to be clarified. And at the time of writing we are yet to see any published finalised guidelines as Michelle points out in her article. However, the team at 6CATS has considered what may likely happen so that contractors can start to consider their position come the New Year and be as prepared as possible. So, with this in mind, here are the top 7 possibilities to be aware of if you’re a contractor seeking overseas work in 2021:
- UK limited company contractors will still not usually be able to use their UK company whilst operating abroad.
- The ongoing misinterpretation over the 183-day rule will continue to cause problems for UK limited company contractors – it’s crucial that you clarify your determination with an expert to prevent facing fines and potential legal action.
- A1 forms, which are already widely misused by UK contractors, will not be recognised by most EU countries. Indeed France, Germany and Belgium have already made it clear they will not recognise them after Brexit.
- We also believe that it is very likely that the use of a UK limited company will not be recognised as a legitimate operating structure for work in EU countries.
- UK ‘umbrella’ workers should not be working outside the UK now, except for very short-term contracts, and we expect this will be tightened up further in the near future.
- Right to Work letters (RTW) have already been issued by all EU countries to those contracting in those locations that are already registered. We believe that those not registered will be required to apply for appropriate authorisation to work in each destination (this could be a visa, work permit or a form of RTW), though again this is not certain.
- While not directly related to Brexit, the need for a comprehensive private medical insurance policy will continue to be a very important requirement, post-Covid. So while 6CATS International has always recommended that contractors have this, there’s no doubt the pandemic has pushed it much further up the agenda for international contractors.
International contractor compliance: do your research
While Brexit looks set to change the international contractor landscape, the ongoing Covid-19 pandemic is also continuing to cause challenges. Coronavirus has certainly impacted recruitment agencies’ ability to do business domestically and, as a result, we’ve seen many diversify in recent months with some making the decision to look across borders for opportunities as they endeavour to stay afloat during the crisis. So, while this means that there will likely be more opportunities for contractors in the coming months, it also means that professionals will need to be particularly careful that they are working with agencies that are operating compliantly themselves. And as Michelle points out in her article: “Our concern, though, is that there may be some that seek to cut corners, thereby jeopardising their contractors, their clients and their own businesses. For our part, we will continue to offer support and advice to prevent this as best we can. For contractors in particular, it’s crucial to ensure you and the agency you’re partnered with are fully compliant no matter where in the world your assignment is. As such we would always recommend that you seek advice pertinent to your individual circumstances.”
Consequently, it’s perhaps more important than ever that contractors are working with a partner that won’t land them in hot water when it comes to tax compliance. Governments are showing no signs of slowing down their activities when it comes to clamping down on compliance breaches and tax evasion, in fact we are seeing quite the opposite as many try desperately to claw back much needed funds in the wake of the coronavirus.
The future might be uncertain but protecting yourself is vital
Consequently, doing your research concerning the key areas of international contractor compliance and ensuring you are working with partners that won’t put you in jeopardy is absolutely fundamental. And with many contractors still working remotely for the time being where regional lockdowns are still in play, there is the added complexity relating to working in your home country for a project being run in another location. You could potentially be caught out as a result of a simple misclassification or reporting error. So, whether you’re looking at working overseas, or are currently working from your home, there are a whole host of implications that you need to consider. And by working with a reputable partner that can guide you through the process you can protect yourself from falling foul of local laws.
The future is nothing short of uncertain with both Covid-19 and Brexit set to make the world of contractor compliance even more challenging. In order to mitigate the risks and ensure you stay on the right side of the law no matter where you’re working, partnering with an expert is key. Contact the 6CATS International team today to find out how we can help you with your next assignment.