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I live in the UK and am looking for a new job. I have been approached by a US based company who have no UK subsidiary or presence.

They want to offer me a job, but in order to get paid I will likely have to either open a Ltd Company or work as self-employed, most likely the former as the company made it clear that they wish to employ me - in a regular employer-employee relationship, though the contract will be drafted in terms of me offering consultancy services to them (I am still waiting on the actual contract to come in).

I am uncertain whether this makes sense, given that they will, in fact, be my employer. I don't see how this will work in both the legal and tax sense - it feels like a tax dodge by them (and I am worried it will fall back on me).

They have a few hundred employees across the world, including here in the UK, apparently under similar contracts, so all "employees" are classed as self employed in the country they reside and are responsible for paying their own taxes and have no employment rights but have to abide by company protocol as though they are employed.

This feels rather unusual to me - is there cause for concern?

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    Since there seems to be no food involved, checking for kosherity seems to be a futile exercise here. – Masked Man Nov 26 '17 at 11:02
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It does look like you would be classed as an employee under IR35 however you would need to get a lawyer to check this and to draft an IR35 friendly contract.

http://www.contractoruk.com/contracts/wary_consultancy_contract.html

Supervision, Substitution, Mutuality of obligation and Control are some of the key areas HMRC look at to determine if you are a true self employed.

Oh and remember the rule of thumb is charge 3x the rate that a full time employee would get as an employee.

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  • So, is this dodgy or just something acceptable/normal? – DigiFriend Nov 23 '17 at 21:32
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    @DigiFriend depends on the contract its a complex issue and probably not in scope of this site have a look at contractoruk.com/ir35/… – Neuromancer Nov 23 '17 at 21:42
  • I mean the whole situation - a US company hiring someone like this and insisting on them "consulting". – DigiFriend Nov 23 '17 at 21:43
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    the "but have to abide by company protocol as though they are employed." does sound dodgy for a self employed person you need a lawyer to look at the contract – Neuromancer Nov 23 '17 at 21:54
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    The main things to look out for is if the company wants full control but don't want to offer things that are considered minimum worker entitlements here in the UK such as paid holiday, sick leave, a standard 35 hour work week and the usual rates for unsociable hours (1.5 x rate for out of hours/Saturdays, 2 x rate for Sundays). If they're trying to have their cake and eat it, resist/refuse to sign - at the end of the day, the only one losing out is you. – toadflakz Nov 24 '17 at 8:52
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Operating a company takes resources, and a company may have insuffiecient resources to expend everywhere they want to operate, particularly in countries that place a high burden on companies in respect to their employees.

So, I wouldn't say it was cause for concern, but it is something that you should keep in mind when determining what your compensation should be.

BTW -- LTD or self employed should make no difference to them. They want you, and they want you to be available when they need you. How you structure that isn't really their concern.

I'm not sure what you mean by company protocol...

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  • Just a guess but to hire you as an employer means there are legal responsabilities like (depending of country) social security, minimal wage, max week hours, fees, taxes, paid vacancies, medical care, unions etc. If you are "hired" as a company much of this disapears or becomes your problem. – jean Nov 24 '17 at 10:58
  • @jean that's why in the uk self employed contractors get paid a lot more 2.5 to 3 times the FTE rate – Neuromancer Nov 24 '17 at 11:11
  • @jean: yes, plus facilities, taxes, incorporation fees, and as Neuromancer says, that's why contractors (or the contractors company) get paid more. – jmoreno Nov 24 '17 at 14:01
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am uncertain whether this makes sense, given that they will, in fact, be my employer

Erm, no they won't. You will be a contractor, they will be your customer.

They will have the ability to terminate their relationship with you as per the terms of the termination clause of the contract you agree, this could be immediate when it suits them.

You look also like you would fall foul of IR35 (as a disguised employee) so will pay tax as an employee (rather than the benefits of being an ltd) also without the protections a real employee would have.

So I would consider a ltd, and look at IR35 rules to ensure you stay as an external consultant to reap the benefits.

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