The tax and administrative rules for short term business visitors (STBV) to the UK are set to ease, according to a new government consultation. The objective is to make the UK a more attractive place to headquarter and do business.
The government recognises that the current rules do not provide relief for employees resident in non-treaty countries who visit the UK for work purposes, nor for employees of a foreign branch of a UK employer who visit the UK on business. The government aims to tackle these anomalies and has put forward two proposals.
The first proposal will relax the current STBV arrangement by increasing the UK day count to 60 workdays (rather than 30). This will provide an administrative easement for businesses with STBV from non-treaty territories and overseas branches, essentially dispensing real time reporting in favour of an annual PAYE scheme for more STBV.
The second proposal (that will be favoured by business) will provide a new tax exemption for STBV from overseas branches (where the UK holds a double tax agreement). There has been a longstanding discrepancy in treatment for STBV from overseas subsidiaries compared to overseas branches. So, take for example a UK bank with a French subsidiary that has entered into a STBV arrangement with HMRC. The current rules mean the UK bank is relieved of the tax and admin burden in relation to the individual. However this treatment is not reciprocated for a UK bank with a French branch as a result of a rather strict application of the rules by HMRC.
If the proposals are taken forward, the reform will come at a good time - just when the UK needs to position itself as open for business.
You can read more about our thoughts on this in a recently published article in the 1 June 2018 edition of Tax Journal.