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International employees – Short Term Business Visitors

Where a UK company is part of an international group, it may be common for group employees to visit the UK to work for the UK company. Where these visits form part of a secondment arrangement, resulting in the employee becoming UK tax resident, the UK company’s obligations are likely to be clear; UK income tax and NICs (if applicable) will need to be deducted via PAYE.

However, a PAYE obligation also exists where group employees visit the UK and perform duties here on a short term basis. These visits could be for a number of days, weeks or months and the UK company will be treated as the employee’s ‘host employer’ for UK tax purposes.  For such Short Term Business Visitors (STBVs), the basic position is that the UK company must operate PAYE in relation to the employee’s UK workdays – the obligation applies even if the UK company has not incurred the associated salary cost. This can be a considerable compliance burden as companies must monitor their visitors and UK workdays to ensure that PAYE is operated correctly. There is no de minimis and a single UK workday would be caught.

The good news is that the PAYE obligation (in respect of income tax only) can be removed if the UK company is able to enter into an agreement with HMRC under the Tax Treaty between the UK and the employee’s home country. The rules are complicated and detailed records need to be kept and a return made to HMRC at the end of the tax year.

Unfortunately the NIC position of the visiting employee has to be considered separately. The liability to NIC (for both the employee and employer) will be dependent on the number of days spent in the UK and the terms of any social security agreement in place between the UK and their home country. 

 

 

Date: 20th March, 2018
Author: David Hadley

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