Yes, and the standard case is straightforward
Thousands of UK businesses engage developers, designers and assistants overseas, and HMRC's guidance assumes it happens. Where the contractor is non-UK resident and performs all the work outside the UK with no UK-source duties, HMRC's Employment Status Manual (ESM10025) confirms they are unlikely to fall within UK tax or NIC, so the off-payroll rules do not apply and you are relieved of the duty to issue a Status Determination Statement. You pay the invoice gross and the contractor accounts for their own tax at home. The conditions matter, though: if the contractor is UK tax resident, or comes to the UK to perform duties even for a few days, UK PAYE can come into play. Confirm and evidence non-UK residence in writing, put a clause in the contract preventing UK-based work without agreement, and record where the work is actually done.
The two risks that actually bite
Misclassification is tested in two legal systems at once. Both the UK and the contractor's country look past the label to control, integration, substitution and financial risk, and a person you call a contractor can be a deemed employee under local law, with backdated payroll taxes and penalties. The second, more hidden risk is permanent establishment: a contractor who can conclude or routinely negotiate binding contracts on your behalf, or who becomes your de facto local arm, can give your company a taxable presence in their country. The OECD's 2025 model update, published on 19 November 2025, sharpened the analysis of when a home office becomes a fixed place of business, so long-term remote arrangements are under more scrutiny, not less. Keep contract authority in the UK, and where one person is becoming your presence in a market, consider an Employer of Record or a local entity instead. The company residence and permanent establishment rules explain the underlying tests.
VAT, deductions and paperwork
For business-to-business services the place of supply is where you, the customer, belong, so the contractor invoices without UK VAT and you account for it under the reverse charge, declaring output VAT and reclaiming input VAT on the same return. For a fully taxable business that is VAT-neutral, but the value counts towards the £90,000 registration threshold and becomes a real cost if you make exempt supplies. The fees themselves are deductible against corporation tax if incurred wholly and exclusively for the trade, at 2026/27 rates of 25% over £250,000 of profits and 19% up to £50,000. Keep the contract, invoices and payment evidence for six years, and do not forget an express assignment of intellectual property, which does not pass automatically from a contractor the way it can from an employee. Our full guide to hiring overseas contractors covers the whole checklist, including country notes. Horizon advises UK engagers on cross-border arrangements for a fixed fee agreed upfront, and a free clarity call is the easiest place to start.