Tax tip: NICs

With the increased ‘internationalisation’ of work advisers may have private clients who are working for foreign businesses which have no formal presence (eg a branch or permanent establishment) in the UK. In such cases it is common for these companies to state that the UK workers only have a ‘service agreement’ and that they are self-employed rather than employees.

So what does this mean for NICs? The answer is ‘it depends’. It cannot be assumed that only class 4 contributions are due. Rather one needs to consider whether the client is genuinely self-employed. Or are they – in accordance with wider UK tax law – an employee? Moreover if they are an employee one needs to check where their employer is actually based. Are they for example based in an EU (or EFTA) state or a non-EU state?

Clearly if the client is...