The United Kingdom has concluded social security agreements with certain third countries. The fundamental principle in this regard is that social security must be paid in the country where the worker resides, provided that certain conditions are met. A certificate of coverage is required to confirm the position. If the conditions are met, a UK employer can ask HMRC not to exploit PAYE on visitors` income in the short term. This is called the Short-Term Business Visitors` Agreement (STBVA) or Appendix 4 Agreement. Second, the agreement now clarifies its position on what is commonly referred to as the «60-day rule». Under the 60-day rule, exemption from income tax in the UK remains permitted under a tax treaty, even if the employee`s remuneration fee comes into force for the UK company, provided that all other conditions are met. This is done on the basis that the employee`s visits to the UK are less than 60 days. HMRC proposes two easements (A special PAYE arrangement and Appendix 4 STBVA agreement) to the starting position applicable upon request; They may not be used unless an employer is expressly authorised by HMRC. Easements do not apply to directors of a British company.
Non-resident directors are considered an office or employment in the UK, so care must be taken to meet these pay slip obligations. In many cases, there is a double taxation treaty that mitigates the personal tax debt of an STBV employee in the UK. If this is the case, an STBV agreement must still be concluded, otherwise the employer will have to manage the PAYE tax and the employee would then have to file a tax return to recover the PAYE tax. The conclusion of an STBV agreement only requires the annual submission of an STBV report to HMRC. For the purposes of the agreement itself, a test based on the UK tax year is applied, in particular because Annex 4 allows for a relaxation of PAYE, which is applied after the tax year. The UK tax year is not relevant for the exemption of contracts, as most agreements provide for a twelve-month period for the review of the daily limit. This is also included in the Annex 4 agreement, as the UK host is required to monitor the 183-day limit over a twelve-month period. Taking this into account in real time is a challenge for guest employers, although technological solutions and the ability to work remotely may allow individuals to more proactively manage the time they physically spend in the UK than in the past.
HMRC has confirmed that employers who already have an STBV agreement are not required to sign a new agreement; the existing agreement remains in force. However, UK employers with short-term business travellers should remember that employers who have STBVs should conclude an stBV agreement as soon as possible and that there is still time to apply for an stBV contract and submit an annual report for the 2019/20 financial year. HMRC has announced the revision of the STBV agreement in two ways. Under UK tax law, an employer is required to withhold funds known as Pay as You Earn (PAYE) for all employees, including international workers travelling to the UK.