CIPP response to Consultation on Tax and administrative treatment of short term business visitors from overseas branches

13 August 2018

A consultation was published to consider two possible options of how change could be introduced to ease the administrative burden on employers dealing with the tax and administrative treatment of Short Term Business Visitors (STBV) from foreign permanent establishments (“overseas branches”) of UK companies.

In the consultation the government is considering two broad policy options aimed at realising improvements for UK companies:

  1. Extending the PAYE special arrangement UK workday rule

  2. A new tax exemption for STBVs from overseas branches

 

To provide feedback, over and above comments shared during an HMRC roundtable, the Policy team ran a survey of our members which ran throughout July. The survey findings, where relevant, are used to support our answers.

 

Summary conclusions

  • The survey we ran to support this response received 10 responses in total, which is insignificant in contrast to the numbers that we would reasonably expect from our membership base and we know from other research that over 20% of our membership base manage international payrolls in addition to their UK payrolls.

  • It is believed that this low number reflects an apathy amongst affected employers when it comes to compliance with the significant administrative burden that is required for little or no yield to the exchequer – and thus there is a perception that this holds less importance than other tax and reporting obligations and is simply an ‘unnecessary’ significant administrative burden.

  • Whilst not covered within this consultation the current 19 April deadline for the STBV PAYE Special Arrangements is impractical and results in the annual need for submission of EYU’s. We would call for further consultation in this area that will result in a significant extension to the deadline for STBV PAYE special arrangement.

  • There are benefits to be gained by the implementation of both option one and option two – we don’t see this as an ‘and/or’ choice.

  • Consideration be given to consulting further on greater alignment with definitions and numbers for example day counts between different processes that are unique to affected employers in this space. We support the calls for greater alignment but recognise the challenge to employers of recording all days of presence such as personal holidays that may not currently be recorded in relevant company systems.

 

The imminent departure of the UK from the European Union will have a significant impact on business visitors generally but more specifically the impact on National Insurance costs is the cause of significant unrest. We are aware that this falls outside of the current consultation and that much is unknown at this juncture but are minded that the employer population impacted by proposals within this consultation will be impacted significantly and so look forward to open consultation and discussion as to how working policies and practices will need to be adapted.

 

The survey results can be found within our response to this consultation in the Policy hub under My CIPP on our website.