International Assignments: Short term business visitors and PAYE

31 January 2012 |

Many employers remain surprised that earnings in respect of duties performed in the UK are taxable and subject to PAYE even if the employee is not tax resident in the UK and is present in the UK for less than six months in any tax year.


In the current economic climate employers are looking at ways to reduce employment costs by seeking alternatives to the traditional long term assignment.  For this reason “business visits” by oversees employees have become more popular.  Most visits are ad hoc and not under any formal policy and therefore easily overlooked by HR.  However, they can give rise to significant PAYE liabilities.

UK Income tax and PAYE liability for short term business visitors

A “business visitor” in this context is someone who comes to carry out their employment duties in the UK.  The term does not include those who come to the UK to carry out duties which are “merely incidental” to their main overseas duties (but beware, this phrase is very narrowly construed).

The individuals will typically remain resident in their home country and come to work in the UK for short periods not exceeding six months.  Under prevailing tax law the earnings of such individuals are subject to UK income tax and the UK company to whom they are providing services will be deemed to be liable for PAYE.

If the employment costs of such employees are not borne by the UK company then it may be that such earnings will ultimately be exempt from UK tax under the terms of the applicable double tax treaty with the employee’s country of residence.

However, HMRC may still look to the UK company which receives the benefit of the employees work for the PAYE income tax due in respect of the earnings of that employee which are attributable to UK workdays.

Many companies are unaware of such liabilities.  As a result they are often imposed well after the event and are also accompanied by demands for interest and penalties for late payment.

Relaxation of PAYE for Short Term business visitors

Thankfully, HMRC are willing to relax the operation of PAYE in such circumstances for companies who enter into a Short Term Business Visitors Agreement (“STBV Agreement”) with it.   The Company has to keep and undertake to provide certain specified records to HMRC by 31 May following the end of each tax year.  The level of information required to be provided depends on the length of time that the relevant individuals remain in the UK.   What is essential is that the company establishes some form of internal reporting system to keep as accurate as possible a record of employees visiting the UK on business.  HMRC expects that this system will have the following minimum requirements:

  • that employees will periodically report days spent in the UK on business to the central point controlling this arrangement; and
  • that employees should not spend more than 30 days intermittently in the UK in any 12 month period without reporting to that central point.

Those that enter into such an agreement with HMRC can expect their internal system to be checked on any PAYE audit visit by HMRC.

Please note that if the UK entity for whom the employee is carrying out duties is bearing the costs of their employment then the short term assignment will not fall within a STBV Agreement and HMRC may seek PAYE on their earnings attributable to UK workdays from day 1.

Comment and actions

If an employer has not entered into a STBV Agreement for short term visitors, HMRC may seek to collect UK taxes even though the employee pays taxes in the home country and may ultimately not be liable for UK income tax by virtue of the provisions of a relevant double tax treaty.  Therefore it is desirable that employers have ways of identifying, tracking and monitoring their short term business visitors and consider agreeing a STBV Agreement to covering their business visitors.  Such tracking arrangements are not always easy to put in place but the alternative can be an unforeseen demand for PAYE.

For further information please contact Bina Gayadien ( ) or Guy Abbiss ( or contact us.


Content is for general information purposes only.  The information provided is not intended to be comprehensive and it does not constitute or contain legal or other advice.  If you require assistance in relation to any issue, please seek specific advice relevant to your particular circumstances.


Content is for general information purposes only. The information provided is not intended to be comprehensive and it does not constitute or contain legal or other advice. If you require assistance in relation to any issue please seek specific advice relevant to your particular circumstances. In particular, no responsibility shall be accepted by the authors or by Abbiss Cadres LLP for any losses occasioned by reliance on any content appearing on or accessible from this article. For further legal information click here.

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