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Short term business visitors – a wider net?

24 May 2018

On 14 May 2018, HMRC launched a formal consultation to review the current rules for short term business visitors (STBVs) to “simplify the tax treatment of STBVs from the foreign branch of a UK company, to ensure the UK is an attractive location to headquarter a business”.


Current rules

Companies must operate PAYE in real time on the earnings of short term business visitors (ie, employees of an overseas subsidiary, parent or other group company or organisation coming to work for 183 days or less in a tax year in the UK). Although, in many instances, there is a double tax treaty available (between the UK and the employee’s home country) - which will mitigate the UK tax liability – this can only be claimed once it is certain that the conditions for exemption have been met (usually after PAYE deductions should have started).

HMRC recognises this problem for UK businesses by allowing the UK companies to enter a STBV agreement. Once an agreement is in place, it allows UK entities to make a judgement on whether or not their STBVs in the UK will meet the conditions to qualify for exemption from UK tax and not operate PAYE provided they track and monitor the days each spends in the UK. However, HMRC’s view is that where no STBV agreement is in place, PAYE must be operated in all cases - even those where ultimately no UK tax will be due. Failure to comply can result in interest and penalties being levied on earnings paid by your overseas offices to their employees who are working in the UK company.

However, there is not a level playing field for all UK companies: those who second employees from an overseas branch of a UK company to work in the UK for short periods are excluded as they are not seen as meeting the conditions for double taxation relief.

Where the employee is seconded from a country which does not have a double tax treaty with the UK, or they are not eligible for double taxation relief, a different arrangement can be struck with HMRC if the individual will only be in the UK for 30 days or less. Under the ‘PAYE special arrangement UK workday rule”, the UK company need not apply the normal PAYE via the RTI rules but can instead make a single payment for the relevant PAYE tax year.



The Government recognises that the current STBV rules are unfair to UK companies with an overseas branch; therefore, the consultation contains proposals to extend STBV agreements to such companies to reduce their administrative burdens.

The consultation also proposes extending the PAYE special arrangement UK workday rule so that employees who work in the UK for 60 days or less can be covered by a one-off payment of PAYE for a year. However, the consultation also asks for statistical evidence of how many STBVs would have benefited from the PAYE special arrangement UK workday rule had it covered longer periods working in the UK (60, 90 or 120 days) – so there is a possibility that a longer period may be the final outcome.

It seems clear that, partly with Brexit in mind, the Government is committed to increasing the attractiveness of the UK as a head office location for international businesses. If implemented, one or both of these proposals would be welcome easements for international businesses.

Read the consultation document

In Budget 2018, the Government has announced that most of these changes will take effect from April 2020.

For help and advice on STBVs or any other cross border employment taxes issue please contact Karen McGrory.


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