Where work is carried out overseas, will relief be given for any foreign taxes paid on the income from the contract by the company against the tax/NI liability on the IR35 deemed payment?

Where work is carried out overseas then the company may suffer foreign tax on its profits. A foreign tax authority may also withhold tax in respect of payments made to the company. Relief for any such foreign tax credits is normally given against the company's UK tax liability.

Where the company does not have sufficient UK tax liability to give full effect any such credit, but the worker does, then the balance may be allowed against the tax liability on the IR35 deemed payment. Relief can only be given where it is possible to directly link the work in the overseas country and the deemed payment. Relief cannot be given against the National Insurance liability.

Where it is considered that relief should be given in this way a claim should be made to the tax office dealing with the worker's tax affairs.