Strict PAYE obligations exist for employers in the UK. PAYE withholding is required when an employee from an overseas parent, subsidiary or associated company visits the UK to work either for a planned project or on an ad-hoc basis. There is no de-minimis limit for this and as such PAYE is due from the first day of work in the UK.
To assist with the administration in this area, HMRC introduced the Short-Term Business Visitor Agreement. This enables the PAYE obligation to be relaxed in situations where individuals coming to the UK originated from countries with which the UK had a Double Taxation Agreement and would not be subject to UK tax. Organisations are required to execute an agreement with HMRC which 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 business visitors is required to make the annual reports and to reduce the reconciliation exercise that can be needed at the end of the UK tax year. Having a responsible tax strategy that includes strengthening of controls around the compliance risks posed by business visitors is a key component of ensuring that your business is not at risk of reputational harm.
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 the available data sources pick up all travel into the UK?
- Beware branch structures and recharges
The agreement does not cover non-resident employees employed by a foreign branch of a UK company, and you should take care in respect of 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.
We can help with your Short Term Business Visitor reporting
Annual PAYE Scheme (Appendix 8)
The STBV Agreement only relaxes the PAYE requirements for individuals who meet the criteria of a relevant Double Taxation Agreement. It does not cover non-resident employees employed by a foreign branch of a UK company, individuals coming from non-tax treaty countries or where the treaty conditions are not met (e.g. due to a costs recharge). In these circumstances, the only option for a Company is to operate PAYE.
The Annual PAYE Scheme was introduced to combat the impracticality for employers of having to deal with employees who do not qualify for STBV treatment. It allows them to account for their visits to the UK for the whole tax year and operate PAYE at the tax year-end, with tax due and the associated RTI reporting to happen at month 12. This applies only to limited categories of visitors.
You will need to make an application to operate a scheme, then report, calculate and pay the appropriate tax by 31 May following the end of the tax year.
How can we help?
Our Business Traveller service brings together the expertise of Global Employer Services specialists in over 160 countries to advise on employer and employee obligations that arise due to short-term cross-border movement or remote working, and we can assist with the completion of relevant compliance requirements when they arise.
Backed by the BDO QuickTrip technology platform, we can provide a holistic solution to the ongoing requirements of your cross-border employee population and the compliance risks that may result from their travel.
Our service is based on your needs, so we have several options to support your Business Traveller requirements:
Other Employers Year End Reporting deadlines
Key contact
Stuart Strong