HMRC publishes new guidance on short-term business visitors

HMRC has published new Guidelines for Compliance (GfC19) covering tax obligations of short-term business visitors (STBVs) to the UK. While the guidance does not introduce any new legislation or policy, it provides a clear indication of the areas HMRC is scrutinising and the compliance standards employers are expected to meet.

For businesses, the key point is that HMRC is placing further focus on whether the employer has the records, controls and evidence to support the positions taken.

Why this matters

A common misconception is that a short UK visit from an overseas employee does not create a UK tax or payroll issue. However, where an overseas employee performs duties in the UK, UK Income Tax and PAYE need to be considered, even if relief may ultimately be available under a double tax treaty.

National Insurance also needs to be reviewed separately. The Income Tax and NIC positions do not necessarily follow each other, and double tax treaties do not determine the NIC treatment.

What HMRC is focusing on

The newly issued guidance highlights a number of areas where HMRC commonly sees mistakes. These include:

• Not having adequate systems to track overseas employees visiting the UK;
• Insufficient records to support PAYE, treaty and NIC decisions;
• Assuming PAYE does not apply because the individual is a short-term business visitor;
• Incorrectly counting UK days for treaty purposes;
• Not identifying recharges or who ultimately bears the cost of the employee;
• Misunderstanding economic employer principles and the 60-day rule;
• Incorrectly including non-resident directors in Appendix 4 or Appendix 8 arrangements; and
• Assuming there are no NIC obligations simply because treaty relief may be available for Income Tax.

None of these points are new in isolation. However, the guidance is significant because it brings HMRC's compliance expectations together in one place and gives employers a clear indication of the areas they should review. However, this should not be treated as an exhaustive list of expectations to fully rely on.

What employers should consider now

Employers with regular overseas visitors to the UK should use the guidance as a prompt to review their internal processes. In particular, companies should consider whether they can:

• Identify all overseas employees who perform duties in the UK;
• Distinguish between UK workdays and other days of UK presence;
• Support any treaty relief position by reference to the correct treaty and the relevant day-counting rules;
• Document the economic employer analysis, particularly where there are recharges or UK supervision;
• Demonstrate that Appendix 4 reporting is accurate, timely and limited to eligible individuals;
• Retain evidence supporting the NIC position, including certificates of coverage or A1 certificates where relevant; and
• Show who within the business is responsible for monitoring STBV compliance.

Where records are incomplete, it may be difficult to defend the position if HMRC opens a review. Businesses should therefore look at whether their evidence files are strong enough before any HMRC enquiry arises.

How can we help clients 

We can support clients by carrying out a practical STBV health check, focused on the areas HMRC has highlighted in the new guidance. This can include:

• Reviewing existing Appendix 4 arrangements and annual reporting processes;
• Testing visitor tracking records and day-counting methodology;
• Reviewing treaty relief positions and identifying any higher-risk cases;
• Advising on economic employer issues, recharges and cross-border project arrangements;
• Reviewing the NIC position separately from the Income Tax position;
• Helping prepare an evidence file to support the employer's position; and
• Advising on any corrective action where historic gaps or errors are identified.

For groups with frequent business travel into the UK, this does not need to be a full-scale review of every visitor. A targeted review of policies, sample cases and record keeping can often identify whether the current process is robust or whether there are gaps that need to be addressed.

Employers with internationally mobile staff should take the opportunity to review their STBV processes, record keeping and supporting evidence, ahead of the 31 May reporting deadlines.

Ultimately, HMRC's latest guidance reinforces an increasingly important point: compliance is not simply about reaching the correct technical outcome, but being able to demonstrate how that outcome was reached and supported.

Businesses with internationally mobile employees should use this opportunity to review their processes before any HMRC enquiry arises.

If you would like to discuss your STBV arrangements or would benefit from an independent health check of your current procedures, please contact a member of our international team.