Employees moving to/ from the UK, family in tow, often get the attention needed from their employer. But what about employees travelling overseas to other group companies who never leave home? The two most common examples are business visitors and commuters.
Business visitors typically come to/from the UK a few days at a time, spending short periods of time in several overseas countries. Companies do not always have an overview of who is visiting their offices from overseas, especially if there are several locations.
Employers aware of their business visitors may rely on the general principle that a few days in a country is too short a timeframe to trigger any issues. But are these employees allowed to work in a country without additional immigration papers? Is there an income tax withholding obligation, even if no final tax liability is due? Who is tracking days spent in the country over a longer period of time, and what if there is no double tax treaty between the UK and overseas country to allow taxation in home country alone?
HMRC expects companies to know who is visiting the UK and have analysed their tax position; a question about business visitors is now standard when they undertake PAYE visits or expatriate reviews.
Commuters travel in/out of the UK on a regular basis, often staying in the host country for the working week and returning home at weekends. They often trigger a tax liability in the host country due to the time spent working there, whilst remaining taxable in their home country as they have never really left and broken residence. This needs to be managed carefully in terms of eliminating potential double taxation, dealing with simultaneous tax withholding situations and the resulting cash-flow difficulties. The employer needs to determine where social security should be paid, and this will impact both employee and employer contributions.
Advice is essential in all of these areas to ensure compliance in both jurisdictions and to find a way through the tax requirements in both countries.
Article posted by James Cowper LLP