Strict PAYE obligations exist for employers in the UK.
When an employee from an overseas parent, subsidiary or associated company visits the UK to work for a planned project or on an ad-hoc basis, PAYE withholding is required. There is no de-minimis limit for this, so PAYE is due from their first day of work in the UK.
Short-Term Business Visitor Agreements enable business’ PAYE obligations to be relaxed in situations where those coming to the UK originated from countries with which the UK has a Double Taxation Agreement, and so would not be subject to UK tax.
Businesses must execute an agreement with HMRC that requires annual reporting of business visitors by 31 May following the end of the tax year, in exchange for a relaxation of the PAYE obligation.
Ongoing tracking of your business visitors is needed to make the annual reports and reduce the complex reconciliation exercise at the end of the tax year. A growing number of businesses are implementing traveller tracking technology to demonstrate a robust approach in this area. A key component of ensuring that your business is not at risk of reputational harm is to have a responsible tax strategy that includes controls around the compliance risks posed by your business visitors.
Do you need a Short Term Business Visitor Agreement?
Top tips for completing your Short Term Business Visitor reporting
- Review the origin country of your visitors
Remember that only visitors coming from a country with which the UK has a Double Taxation Agreement with a competent Dependent Personal Services/Employment Income article are eligible for inclusion in your reporting. - Understand the purpose of the visits
The STBV Agreement is for individuals who travel to the UK to work for the benefit of a UK company. As such, depending on the activity undertaken, not all visitors will need to be reported - Consider the quality of your data
How are your visitors tracked? How confident are you that your available data sources pick up all travel into the UK? Do you need a technological solution to evidence a robust approach to tracking? - Be aware of branch structures and recharges
STBV agreements do not cover non-resident employees employed by a foreign branch of a UK company, and you should take care in any situation where costs are recharged to a UK company. This may disqualify the relief, unless the employee’s visits total fewer than 60 days during the tax year, and do not form part of a longer period of 60 days or more. - Beware Non-Resident Directors
Statutory Directors of a UK company who are performing UK board duties whilst in the UK are not covered by the STBV Agreement. More analysis is required to determine the appropriate PAYE obligation in relation to such individuals – getting expert advice is advisable. - It's not just about Tax
Business travellers also need careful management from an immigration perspective, in particular given recent rule changes in relation to the Electronic Travel Authorisation for non-visa nationals.
