Short Term Business Visitors (STBVs) - KPMG United Kingdom
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Short Term Business Visitors (STBVs): KPMG’s consultation response

Short Term Business Visitors (STBVs)

KPMG has responded to HMRC’s consultation on the tax and administrative treatment of STBVs from overseas branches.



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The consultation

HMRC’s consultation on simplifying the tax and administrative treatment of STBVs from overseas branches of UK companies closed on 6 August 2018.

The consultation proposes two alternatives to reduce payroll administration for UK companies whose overseas branch employees visit as STBVs:

  • Extending the UK workday limit for participation in the special annual PAYE scheme; and
  • A new tax exemption for STBVs from overseas branches.

Under the first option, HMRC propose to extend the qualifying limit for the annual PAYE scheme from 30 to 60 UK workdays.

This would affect STBVs both from overseas branches and from overseas subsidiaries in countries that do not currently have a Double Tax Treaty (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. Its aim would be to align the treatment of STBVs from overseas branches with that of STBVs from overseas subsidiaries who are exempt from UK tax under a relevant DTT.

This would likely include a PAYE relaxation and reporting requirements similar to the current Short Term Business Visitors Agreement (STBVA) requirements (see here for a summary of the current STBVA regime).

KPMG’s view

KPMG’s Global Mobility and Employment Tax experts responded to the consultation.

A copy of our response is available here.

The key points are summarised below.

  • Reform is needed

The current process of managing, tracking and processing payroll for STBVs who participate in the annual PAYE scheme can generate costs that would not have been incurred had they been employed by an overseas subsidiary.

We welcome the Government’s proposals to reduce this administrative burden and maintain the UK as an attractive base for international business.

  • An exemption is our preferred approach

An exemption which, in effect, brings the treatment of STBVs from overseas branches into line with that of STBVs who currently qualify for an STBVA would do most to ease the administrative burden.

  • Further improvements to the annual PAYE scheme

In the event that an exemption is not considered to be the appropriate way forward, we recommend that further reforms be made to the annual PAYE scheme.

In addition to extending the qualifying UK workday limit from 30 to 60 days, we recommend that:

  • The reporting obligations be relaxed (it can be challenging to meet these by the 19 April deadline);
  • HMRC issue a formal certificate of UK tax paid to assist with foreign tax credit claims in the overseas jurisdiction; and
  • The scheme be extended to include directors.

What happens now?

HMRC is currently analysing submissions to the consultation and will publish its responses in due course.

In the meantime, if you have any queries or wish to discuss any aspects of the consultation or KPMG’s response, please contact Colin Ben-Nathan or Matt Fox.

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