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Consultation on Short Term Business Visitors (STBVs) from overseas branches

Consultation on Short Term Business Visitors (STBVs)..

The Government invites views from businesses, travellers and advisers on simplifying the tax and administrative treatment of STBVs from overseas branches.

Colin Ben-Nathan


KPMG in the UK


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On 14 May 2018, HMRC published a consultation on simplifying the tax and administrative treatment of STBVs to the UK from overseas branches of UK companies. The objective of the consultation is to ease the administrative burden and costs associated with STBVs and help make the UK a more attractive place to headquarter and do business. The consultation is open until 6 August 2018.

When an STBV comes to work in the UK, the company has a requirement to report their earnings through the UK payroll and withhold UK taxes via PAYE on a real-time basis, regardless of the number of days they work in the UK and whether their earnings can ultimately be exempted from UK taxation under a Double Tax Treaty (DTT).

To reduce the administrative requirements, HMRC allow companies to make an application for an ‘EP Appendix 4’ Short Term Business Visitors Agreement (STBVA). This relaxes the requirement for companies to report the earnings and operate PAYE withholding tax for individuals who are exempt from UK taxation under the terms of the relevant DTT.

However, these arrangements do not cover individuals coming to work in the UK from an overseas branch of a UK company. This is because HMRC take the position that the conditions for treaty exemption are not met, as the overseas branch is not a separate legal entity to the UK company and so the UK company remains the employer.

In cases where an STBVA does not apply, a company can apply to operate a special annual PAYE scheme, which means that the company can make one payroll report per year shortly after the end of the tax year, rather than make payroll reports on a monthly real-time basis. This arrangement currently applies to visitors from overseas branches or from countries where there is no DTT with the UK. It only applies to individuals who have 30 or fewer UK workdays during the UK tax year.

To reduce the administrative burden for employers who have STBVs in the UK from overseas branches, the consultation proposes two potential policy options:

  • Extending the special annual PAYE scheme UK workday rule from 30 days to 60 days; or
  • A new tax exemption for STBVs from overseas branches.

Under the first option, HMRC propose to extend the limit for the annual PAYE scheme from 30 days to 60 days. This would impact both STBVs from UK branches, as well as STBVs from countries that do not currently have a DTT in force with the UK (e.g. Brazil).

The second option would introduce a new and specific tax exemption for STBVs from overseas branches. The stated aim of this option is to align the treatment of STBVs from overseas branches and from overseas subsidiaries. It would likely include a PAYE relaxation and reporting requirements similar to the current STBVA requirements.

HMRC have included a list of questions in the consultation document to understand employers’ views on the current arrangements for STBVs, and views on the two proposed options and any possible alternatives. This is a very welcome consultation and is likely to generate significant interest from UK employers with overseas branches. The current annual payroll scheme was an easement that was introduced in 2015 following recommendations from the Office of Tax Simplification. Whilst that in itself was welcome, the very tight deadline for the payment of the PAYE and the associated difficulties that can arise in obtaining double taxation relief overseas are two areas where we believe that changes are required to ease the cost and administrative burden for employers.

If you have any comments on the consultation that you would like us to consider as part of our response, please get in touch with Colin Ben-Nathan, Matt Fox, or your usual KPMG contact.

For further information please contact:

Colin Ben-Nathan

Matthew Fox

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