In this post written for the Chamber’s blog, our Member Moore Kingston Smith examines the tax implications of UK short-term business visitors and the challenges they pose for both companies and employees. They offer practical solutions, explain how these rules apply, and outline steps your company can take to streamline the process.
Blog post written by Moore Kingston Smith, Member of the Chamber
UK short-term business visitors and tax – what do I need to know?
Tax authorities worldwide, looking to increase revenue, are focusing on people travelling for work. Immigration and tax are increasingly coordinated, and countries exchanging information is now commonplace.
What is short-term business visitors tax?
In the UK, the default income tax position for an employee visiting the UK for work purposes from another group company operating overseas is that the UK entity must add them to UK payroll and withhold tax – even if it is for just one day. Many countries have similar rules regarding short-term business visitors.
This is burdensome for both the company and the individual. In addition to the UK payroll requirements for international employees, the individual is likely to have to file a tax return to claim the tax back under treaty if it is not due.
What is the solution?
Each country has its own set of rules and regulations. In the UK, an agreement with HMRC can be reached where a tax treaty between the UK and the foreign country exists, called a short-term business visitor arrangement. This enables treaty rules to be applied upfront, removing the need for payroll registration and tax return completion, if all conditions are met.
An application is made to HMRC in which the company agrees to track its employees’ international movements and supply the required information to HMRC in an annual report, due on 31 May after the tax year-end.
The amount and type of information reportable increases with the amount of time an individual spends in the UK. Once HMRC has agreed to the application, the company benefits from the simplified compliance of the HMRC short-term business visitor arrangement.
How will HMRC know you have business visitors?
HMRC regularly investigates international visitors during employer compliance checks and has increasing access to information about people travelling.
Technology has made it easier for countries to track people’s travel. For example, the EU is set to launch an entry-exit system on 10 November 2024. This will use digital photographs and fingerprints to register travellers from non-EU countries, including the UK, when they enter the EU. This applies to both short-stay visa holders and visa-exempt travellers.
It will be easy for authorities to check their records to determine legal compliance, including tax implications for short-term business visits.
How can Moore Kingston Smith help?
Please contact us to learn how your company can benefit from a short-term business visitor arrangement, how to apply, what information is needed, and how to file the annual report.
