Tax Compliance in the Wake of the Pandemic

The impact of the pandemic on Short Term Business Visitors

The impact of the pandemic on Short Term Business Visitors

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For many businesses which have reported STBVs annually to HMRC via an Appendix 4 agreement, the pandemic and associated travel restrictions may have resulted in a significant drop in the overall number of business travellers to the UK during 2020/21.

It is therefore worth noting that HMRC has confirmed that an STBV report does not need to be submitted in either of the following circumstances:

  • Where there were not any business travellers to the UK during the tax year; or
  • Where all the visitors to the UK were covered by the “60 day rule” and were in the UK for fewer than 31 days during the tax year.

However, for some there will of course remain the need to report STBVs for the 2020/21 tax year, particularly in instances where perhaps individuals were stranded in the UK for a period of time during the pandemic and carried out work for the UK business while here.  There may be challenges in gathering and analysing data regarding STBVs’ days spent in the UK and it is important to recognise that whilst UK domestic residency rules allow for up to 60 days to be disregarded if time has been spent stranded in the UK due to the pandemic (the “Exceptional Circumstances” rule), this does not extend to day counts for STBV purposes.  In such cases, OECD principles are applied, and the only days of presence in the UK which may be disregarded are days when the employee was either sick or required to self-isolate and they were consequently unable to leave the country.  As with all relaxations of this nature, it is also important that both employee and employer can provide evidence to substantiate the position, where UK days are disregarded on this basis.

In recognition of some of the challenges presented by the pandemic, HMRC has extended the filing deadline for Appendix 4 STBV returns by a month, from 31 May 2021, to 30 June 2021.  In a similar vein, the 30 June extension also applies to filings due under the modified payroll reporting arrangements for employees coming to and leaving the UK, commonly known as Appendices 7A, 7B and 8. 

Actions for employers: whilst this relaxation does provide employers with a little more leeway, as ever, early preparation and careful scrutiny of STBVs’ UK day counts are strongly recommended for all employers from whom Appendix 4 reports are due at the end of June.