Short Term Business Visitors
Many businesses are now finding that it’s much more cost-effective to send individuals to work on projects abroad for short periods rather than using the traditional 3 to 5 year expatriate assignment model. What does this really mean though?
In the UK there are provisions in HMRC’s own manuals relating specifically to individuals sent to work in the UK for short periods of time, with 183 being the maximum number of days allowed. Under most of the tax treaties between the UK and other countries, an individual may be exempted from tax in the UK if they are only visiting for short term employment and, crucially, they remain employed throughout by their home country employer. This treatment is not available for individuals who simply decide to come and work in the UK for a couple of months before going home again; there has to be an overseas employment contract in force throughout.
There are other criteria as well, usually that the individual’s costs are not recharged to a UK permanent establishment of the home country employer and that the 183 day limit is not breached. If your assignee fits these criteria then they may not have to pay UK tax.
However, even if the assignee is exempt under a tax treaty from a liability to UK tax, that doesn’t mean that there is nothing for the UK company to do. Tax and payroll operation are not the same thing and even if there is no tax to pay under a treaty the UK company may still need to operate PAYE payroll withholding on the assignee’s income!
HMRC acknowledges that this creates extra work for both the company and the tax authority which is pointless as the tax will only end up being refunded, and so it is possible to enter into an agreement with HMRC whereby qualifying individuals can be excluded from payroll in exchange for a report after tax year end, detailing who has been excluded. There is also a relatively new arrangement that allows employers to include certain employees from countries without a tax treaty with the UK, under certain circumstances.
Global Eyes Tax Services can help you secure an agreement with HMRC to make your payroll compliance simpler where short term business visitors are concerned. For help, Contact Us.