AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
Usually the Nigerian client does not have to apply the off-payroll rules. HMRC's Employment Status Manual says the Chapter 10 rules do not apply where the client is wholly overseas with no UK connection, meaning not UK resident and no UK permanent establishment. But IR35 does not disappear: your own company must then consider whether the original Chapter 8 rules apply, and pay the tax if they do.
Two different sets of rules are both called IR35. Since April 2021, medium and large clients in the UK have had to decide the status of contractors working through personal service companies; that is Chapter 10 of Part 2 of ITEPA 2003, the off-payroll working rules. Before that, the contractor's own company decided; that is Chapter 8, and it still exists. Which one applies when your client sits in Lagos is the question.
What HMRC says about overseas clients
ESM10025 (updated 7 October 2026) says that where a medium or large non-public sector client is "based wholly overseas", the Chapter 10 rules "do not apply" if, immediately before the tax year begins, the client has no UK connection. HMRC defines that as the client not being UK resident and having no UK permanent establishment. The manual then says the worker's intermediary "should consider whether Chapter 8 ... applies instead".
Two other points in the same page matter:
- Your own UK company is not, by itself, the client's permanent establishment.
- If the Nigerian client does have a UK permanent establishment (a branch, office or an agent who habitually concludes contracts for it), it remains responsible under Chapter 10, and HMRC can pursue the debt through that UK presence.
Who decides your status
| Client | Rules | Who decides and pays |
|---|---|---|
| Nigerian company with no UK residence or permanent establishment | Chapter 8 | Your own company |
| Nigerian company with a UK branch or office | Chapter 10, if medium or large | The client, through its UK presence |
| UK subsidiary of a Nigerian group | Chapter 10, if medium or large | The UK subsidiary |
| Small UK client | Chapter 8 | Your own company |
If Chapter 8 applies
Chapter 8 asks whether, if your company were taken out of the picture, you would be an employee of the client. The factors commonly looked at include how much control the client has over how you work, whether you could send a substitute, and whether you carry financial risk. If the answer is "employee", your company has to account for PAYE tax and National Insurance on a deemed payment; an accountant can show you how it is calculated. HMRC can enquire into this later, so record your reasoning.
Signs that point outside
- A fixed-price project with defined deliverables
- You choose how, when and where you work
- You use your own equipment and can bring in help
- You work for several clients
Signs that point inside
- A long, open-ended day-rate engagement
- The client sets your hours and supervises daily
- You are treated like staff: email address, appraisals, line manager
- You work only for this client
National Insurance
ESM10025 notes that a UK-resident worker carrying out duties in the UK is normally within the NI rules, while duties performed outside the UK can change the position depending on how long you are abroad and where the client is based. If you spend long spells working from Lagos, take advice on both the tax and NI picture.
A worked example
Example only. Bola contracts through her own UK company, earning a day rate from an Abuja bank with no UK office. She works three days a week to a schedule the bank sets, attends its daily stand-ups and has a bank email address. Because the bank has no UK connection, Chapter 10 does not apply. Her company must apply Chapter 8 itself, and on these facts there is a real risk the engagement is inside; she asks an accountant to review the contract and working practices before the year end.
Keeping a status file
Because no client will hand you a status determination statement, the evidence is yours to build. For each Nigerian engagement, keep the signed contract, any statement of work, a note of how the work is actually done (who sets hours, who you report to, whether you have used a substitute or helper) and your own conclusion with the date you reached it. Review it if the engagement changes, for example when a fixed project turns into an open-ended day rate. If HMRC opens an enquiry years later, a contemporaneous file is far more persuasive than a reconstruction.
Nigerian tax on the invoice
Separately from IR35, the Nigerian client may deduct withholding tax from your company's invoices. See Nigerian WHT on UK invoices and claiming WHT credit.
Where Pryme fits
A Pryme Business Account can receive a Nigerian client's payment in naira or dollars and hold it with pounds. The Finance agent can prepare a summary of income by client for your accountant; you approve anything before it is sent. See business accounts.
Questions people ask
Does IR35 apply to overseas clients?
The client-led Chapter 10 rules do not apply where the client is wholly overseas with no UK residence or permanent establishment. Your own company must then consider the original Chapter 8 rules.
Who decides IR35 status for a Nigerian client?
Usually your own company, under Chapter 8, unless the Nigerian client has a UK permanent establishment and is medium or large.
Does my UK limited company count as the client's UK presence?
No. HMRC's manual says a UK-resident intermediary is not by itself the client's permanent establishment.
What happens if my Nigerian contract is inside IR35?
Under Chapter 8 your company works out a deemed employment payment and pays PAYE tax and NI on it.
Sources
- HMRC Employment Status Manual ESM10025: off-payroll working, international tax issues (updated 7 Oct 2026) · accessed Oct 2026
- UK–Nigeria Double Taxation Convention 1987 (GOV.UK PDF) · accessed Oct 2026
- PwC Nigeria: highlights of the Deduction of Tax at Source (Withholding) Regulations 2024 · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.