UK employers are subject to strict PAYE obligations and the obligations for short-term business travellers are no exception. When employees from overseas group companies come to the UK for work, PAYE must be applied from day one. However, these obligations can be relaxed where a Short-Term Business Visitor Agreement is in place – either an Appendix 4 (Short Term Business Visitors (STBV) Arrangement) or Appendix 8 (PAYE Special Arrangement for STBVs). The key difference between these two arrangements is the presence of a double taxation agreement (containing a relevant employment income article) between the UK and the home country from which the individuals travel or individuals who are employed by an overseas branch of the UK company.
To access these relaxations, businesses must agree terms with HMRC and submit an annual report of business visitors by 31 May after the tax year end.
Similarly, a Short-Term Business Traveller agreement can be put in place to allow UK employers to reduce the amount of UK PAYE deducted via payroll for UK employees working abroad. This arrangement allows provisional double taxation relief via payroll for employees who pay tax in the UK and overseas on the same earnings. The same deadline of 31 May following tax year end exists for reporting of such employees to HMRC.
A strong tax governance model, supported by clear controls and business traveller tracking, is key to managing compliance risk and protecting against reputational damage for UK employers.
Top tips for completing your Short-Term Business Visitor reporting
Data
How do you track your travellers and how confident are you in the data? Clear identification of the countries from which your overseas employees are inbound from (to the UK) and likewise, to which countries your UK employees are travelling to is critical to understanding which arrangements they may be covered by, as well as the number of days spent in the requisite country.
Purpose
The STBV Agreement applies to individuals who come to the UK to carry out work for the benefit of a UK company. Therefore, depending on the nature of their activities, not all visitors will need to be included in the reporting.
Structure
The position of non-resident Directors who perform board duties whilst in the UK are not covered by the STBV Agreements and specialist advice is recommended in determining the appropriate PAYE obligations in relation to such individuals. Caution is also needed where costs are recharged to a UK entity, as this can invalidate the relief.
Other considerations
Business travellers also require careful oversight to mitigate other compliance risks – such as from an immigration perspective, particularly considering recent changes to the Electronic Travel Authorisation rules for non-visa nationals.
How can Menzies help?
Our Global Mobility team can guide you through the process of business travel compliance, from reviewing your traveller population, to assessing the requirements and eligibility for a STBV Agreement and supporting your application and reporting.
We can also work with you to review the ongoing tracking and management of compliance risks that arise from the cross-border travel of your employees and advise on business traveller policy approaches.
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