HMRC has published a consultation, ‘Tax and Administrative Treatment of Short Term Business Visitors from Overseas Branches’, which looks to simplify tax and administration for short term business visitors (STBVs) coming from overseas branches of UK companies.
STBVs who come to the UK on the business of an overseas subsidiary of the UK company can benefit from relaxed PAYE rules.
The UK company will not be required to operate PAYE on the STBV whilst in the UK if the individual:
- Is tax resident in a country with which the UK has a Double Tax Agreement.
- Comes to the UK to work for a UK company for less than 183 days in any 12 month period, and
- Is economically employed by a non-resident entity.
- Where an ‘EP Appendix 4’ agreement is in place with HMRC, the individuals are also relieved of the need to pay UK tax on file UK Tax Returns. This avoids the need to make Double Tax Relief claims.
There is no equivalent for overseas branches of UK companies. Instead an annual PAYE scheme that does not require RTI reporting can be used for STBVs in the UK for less than 30 working days, and this can be used by those that do not qualify for EP Appendix 4. Where used, HMRC will accept that no Tax Return is due from the STBV as long as there is no UK tax liability outstanding.
HMRC are looking at two additional simplifications:
- Extending the special PAYE arrangements for STBVs that are ineligible for EP Appendix 4, to cover those in the UK for up to 60 workdays.
- A new tax exemption for STBVs from overseas branches. This would extend the EP Appendix 4 rules to STBVs from overseas branches of UK companies.
The consultation runs until 6 August 2018 and can be read in full here.
Summary of questions
- Q. 1 How many of your staff/your clients staff visited the UK from overseas branches in the 2016-17 tax year? For each visitor:
- a) What was the length of the visit?
- b) Which country did the individual visit from?
- Q. 2 Do you agree that the PAYE special arrangement is an effective simplification of PAYE procedures for STBVs? Please explain why you think this is the case.
- Q. 3 Did you/your client apply for, or operate, a PAYE special arrangement in the 2016-17 tax year? If so:
- c) How many STBVs benefitted from the arrangement?
- d) How many STBVs had to be excluded from the arrangement?
- i. What was the reason for exclusion?
- Q. 4 Do you think an extension of the 30 UK workday rule will make a worthwhile difference to you or your clients?
- Q. 5 How many STBVs could have benefitted from the PAYE special arrangement in 2016-17 if the 30 UK workday rule had been:
- d) 60 days or less?
- e) 90 days or less?
- f) 120 days or less?
- Q. 6 Do you experience any problems when applying for or operating PAYE special arrangements?
- Q. 7 What changes, if any, would you make to improve PAYE special arrangements for you or your clients?
- Q. 8 Do you agree that a new tax exemption will help align the effective tax treatments of STBVs from overseas branches to those eligible for STBVAs?
- Q. 9 Do you think a new tax exemption will help reduce the administrative burdens on UK companies with STBVs from overseas branches?
- Q. 10 Do you have any objections to the introduction of a new tax exemption for STBVs from overseas branches of UK companies?
- Q. 11 Are there any other conditions that would be needed to ensure a new tax exemption is targeted and effective?
- Q. 12 Are there any circumstances that should be excluded from a new tax exemption?
- Q. 13 Are there any circumstances in which the outlined conditions could be abused or misused?
- Q. 14 Should a new tax exemption require that a reasonable rate of tax is paid by the STBV in their country of residence?
- Q. 15 Overall, which of the two options listed at 4.5 would deliver the government objectives most effectively? Please elaborate.