HMRC have identified tax, social security and payroll reporting compliance in respect of short-term business visitors (STBVs) to the UK as one of the higher risk areas for employers and employees. Their new Guidelines for Compliance for short term business visitors are designed to help both employers and employees comply with their obligations in the UK, and to prevent errors. This guidance does not represent a change in law or HMRC policy but helps consolidate all the existing guidance in one place.
Further details
HMRC are increasingly focusing on STBVs as part of their employer compliance reviews, and common issues identified include:
- Employers assuming that STBVs are not taxable in the UK under the terms of a double tax treaty when the tax treaty conditions are not met;
- Employers failing to operate PAYE for STBVs on the assumption that there is no payroll requirement for STBVs if they are treaty exempt; and
- Employers assuming that the social security treatment will mirror the tax treatment.
The purpose of the new guidance is to provide practical support in the following areas:
- The income tax treatment of STBVs, including consideration of the tax treaty conditions as well as areas of particular difficulty such as the economic employer test and the 60-day rule;
- The UK payroll obligations in respect of the STBV, including special PAYE arrangements;
- The social security treatment of the STBVs; and
- Guidance on common errors and areas of risk identified by HMRC, as well as what records and evidence should be retained, and what to do if mistakes are made.
This guidance highlights that HMRC see STBVs as a risk area for employers, and an area of focus in their employer compliance reviews. We recommend that employers review their processes in respect of STBVs in light of this guidance, to help ensure that they are compliant.
HMRC have recently reaffirmed that their Guidelines for Compliance are increasingly relevant to how they assess taxpayer behaviour in enquiries and compliance interventions. While they are not legislation, they are likely to be used as an important reference point when HMRC consider whether businesses have taken reasonable care, particularly in complex or cross-tax areas.
If you have any questions or concerns about this guidance and appropriate next steps, please contact the authors or your usual KPMG in the UK contact.
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