31st May is the annual deadline for employers to provide details of business visitors who spent time in the UK to the UK tax authorities.
In the UK, all business visitors (and short term assignees) are liable to UK tax withholding (known as PAYE) from day one unless an application is made under the Short Term Business Visitor Arrangements for exemption based on treaty relief. This would typically be the case where there is a double taxation agreement in force between the UK and the home country, the business visitor intends to spend less than 183 days in the UK, and salary costs are not recharged to the UK entity.
However, even if PAYE exemption is correctly applied for, an employer may still have the additional requirement to file an annual report of all business visitors. The level of information required is based on the total number of days in the UK during the relevant tax year.
One helpful aspect is that there is a threshold under which no reporting is required, although this is set at a fairly low level of 30 days in a tax year. For those spending 30 to 60 days in the UK, reporting can also be avoided provided that there is no formal contract with the UK employer and the visit is not part of a longer and more substantial period in the UK.
Where a business visitor spends more than 60 days in the UK, an employer must prepare and submit an individual report to the tax authorities. The report must include details such as the name and address of the assignee, duties of employment, the country in which a tax return is filed declaring worldwide income, and confirmation that the UK Company has not borne the costs of the assignment.
Where a business visitor spends more than 90 days in the UK, further information is required, including a copy of an overseas tax residence certificate (from the home country tax authority) or evidence of continuing residence for U.S. citizens. The report must also contain details of the individual’s nationality, place of birth, country where they normally live, UK arrival date, and confirmation that they have not spent 183 or more days in the UK in any tax year, or more than 364 days in the UK in the past five tax years.
In order to benefit from the PAYE exemption, an employer must put in place some form of internal reporting system to keep an accurate record of employees visiting the UK on business. Employees must also periodically report details of visits to a central company administrator responsible for maintaining such records. Failure to maintain accurate records will result in an employer being required to operate PAYE for all business visitors and (where appropriate) file a tax treaty claim for refund of the tax withheld on a tax return at year end, possibly some 18 months later!
The key for any UK employer receiving overseas business visitors (that does not already have a system in place) will be to apply for the Short Term Business Visitor Agreement and introduce and maintain an appropriate tracking system. This is now a “hot topic” in the UK and will always be near the top of the list in the event of an employer compliance review.