UK: Short Term Business Visitors: are you meeting your PAYE obligations?

Last Updated: 12 August 2005
Article by Alexandra Sheldrake

Employers with an international workforce must comply with the tax and social security withholding and reporting obligations that apply to Short Term Business Visitors to the UK. Alex Sheldrake looks at just what these obligations are and how tracking the movements of employees can be simplified.

Have you ever noticed how frequently people from your overseas divisions appear in your offices for business meetings? Ever wondered whether there are any tax and/or social security implications resulting from these visits? You should. The Inland Revenue frequently asks these questions when it carries out Employer Compliance Reviews or PAYE audits, as do authorities in other tax jurisdictions. Judging from recent reviews carried out on some of our clients, Short Term Business Visitor (STBV) issues are right at the top of the Inland Revenue’s agenda.

PAYE for Short Term Business Visitors 

Where, in any period, an individual is performing duties in the UK, strictly the UK host entity (company or partnership) is liable to operate PAYE in respect of those duties.

Whilst the individual may qualify for protection from UK income tax in respect of these duties under a Double Taxation Treaty, the UK entity is still liable to account for PAYE on income earned relating to them.

Penalties and interest will be applied for those entities that do not operate PAYE correctly.

Operating PAYE in such circumstances can be problematic for most employers, as the detail with regard to the duties in the UK and remuneration information may not be easily available.

The solution

A practical solution exists where an STBV is likely to qualify for protection from UK income tax under the Dependent Personal Services/ Income on Employment article of a Double Taxation Agreement. In these circumstances it is possible to agree with the Inland Revenue that PAYE need not be operated for business visitors who fulfil treaty criteria and it is now considered good ‘housekeeping’ to do so. Under the agreement, details of all working visitors to the UK for more than 30 days must be reported to the Inland Revenue by 31 May following the end of the tax year, however PAYE does not need to be operated on the income the visitors receive relating to their UK duties.

The agreement can be made provided that the conditions contained within Appendix 4 of the Inland Revenue Employment Procedures Manual are met. These can be found in the box above.

Where the STBV is in the UK for more than 60 days, PAYE will only be relaxed under the agreement where employment costs have not been recharged to or borne by the UK entity under the ‘economic employer’ argument.

Having an agreement in place ensures that the obligation on the host entity to operate PAYE on income earned by STBVs performing duties in the UK is removed, provided the visitor’s circumstances remain within the criteria set out by the Inland Revenue in Appendix 4. If the criteria are not met, either from the outset or subsequently, PAYE should be operated, backdated to when the visits to the UK first began.

UK individual income tax return compliance

Usually, where the criteria for the concessionary PAYE treatment are satisfied, there will not be a requirement for the individual to file a UK tax return unless he or she has received UK source income which is not protected by the Double Taxation Treaty.

UK social security

It is unlikely that UK NIC will be payable for STBVs, however, employers may need to obtain appropriate documentation to clarify the social security position.

Short Term Business Visitors to other Countries

This is not an issue confined to the UK; countries such as the USA also have issues surrounding business visitors. You may therefore find that the same employee is causing residence and withholding issues around the world.

How do you know that you have a Short Term Business Visitor issue?

For UK purposes, it is the obligation of the UK host entity to ensure that business visitors who are in the UK for more than 30 days during a 12-month period are tracked and that anyone not within the criteria set out in Appendix 4 has PAYE operated on their employment income. Those within the criteria must have details of their visits and information reported to the Inland Revenue.

The problem is how to keep track of your STBVs. One idea is to use expense claims and reports; however this can only be successful if all countries in an organisation do this and communicate back to the UK when an individual visits the UK.

Once a visitor has been identified as a STBV, it is necessary for the host entity to track travel movements throughout the year. For other countries, it is important to note that tracking may need to be carried out for the fiscal and calendar years to ensure that all visits during the tax years for each relevant country are reported.

You may find it virtually impossible to track your mobile workforce as business visits are often not centrally managed. Is the tracking of STBVs an HR, a line manager or a tax issue? That is a question that each host country will have to answer.

Tracking Short Term Business Visitors

A business tool which our clients find particularly useful for STBV purposes is the Deloitte Global Advantage™ Calendar – STBT. It was designed to enable employers to manage the risk of ensuring tax and social security compliance and aims to:

  • assist with the actual international tracking of STBVs, short-term project workers (3-6 months) and short-term assignees (transfers for up to 12 months);
  • provide monthly reports – covering all jurisdictions – to the entity, detailing employer withholding and reporting requirements, together with any employee filing requirement;
  • report in advance of "trigger" dates, to enable the entity to be proactive in managing their business travellers and pull people back from visits early to avoid triggering withholding obligations, for example.

Companies can use the Deloitte calendar for any employee for whom they think STBV issues may arise. These employees are asked to make a record of their movements on the calendar and submit it electronically at the end of each month.


From the calendar, the number of days spent in each country visited is extracted over a specified timeframe.

This information will be used to generate a monthly report for the company for country/countries visited by each individual, specific to their circumstances.

Further information provided by the entity, in order to ascertain who bears the employment costs and recharging procedures, enable the reports to be specific and accurate for withholding and reporting requirements.

For UK purposes, where a STBV agreement is in place, the report generated will be in a format that can be sent straight to the Inland Revenue to comply with the agreement conditions.


It can be a tiresome and difficult task keeping track of business visitors, but it remains the obligation of UK host companies to do this. To avoid PAYE penalties and interest, PAYE must be operated where applicable. If an STBV agreement is in place, an STBV report must be submitted to the Inland Revenue by 31 May following the end of the UK tax year. Details of the information to be provided to the Inland Revenue are included at the end of the article.

Other countries have similar rules and conditions for STBVs and there may also be withholding issues elsewhere. You should therefore consider how you will provide other host countries with information regarding your UK employees visiting their offices.

Conditions for PAYE exemption 

Individuals for whom the following applies may be not subject to UK taxation and, if a Short Term Business Visitor (STBV) agreement is entered into with the Inland Revenue, no PAYE may be due if the individual is:

  • resident in a country with which the UK has a Double Taxation Agreement under which the Dependent Personal Services/Income from Employment article (article 15 or equivalent) is likely to be competent; and
  • coming to work in the UK for a UK company or the UK branch of an overseas company; and
  • expected to stay in the UK for 183 days or less in the period referred to in the treaty (12 month period or fiscal year).


Information to be reported to Inland Revenue under STBV agreement

Visitors to the UK 1 – 30 days

  • No requirements for either employer or employee.

Visitors to the UK 31 – 60 days

PAYE can be disregarded provided that the company can confirm that:

  • there is no formal contract of employment for the UK work;
  • the 60 days do not form part of a more substantial period.

Visitors to the UK 61 – 90 days

PAYE can be disregarded provided that the employer supplies the following information by 31 May following the end of the tax year:

  • Full name of employee.
  • Last known UK and overseas addresses of employee.
  • Nature of duties undertaken.
  • Date commenced.
  • Date ceased.
  • To which country a tax return covering the worldwide income is submitted.

The UK company must also confirm that the UK company does not:

  • ultimately bear the costs of the employee’s remuneration; or
  • function as the employee’s employer during the UK assignment. 

It must also be confirmed that in the last four tax years, visits to the UK were less than:

  • 364 days in total; and

  • 183 days in any tax year.

Visitors to the UK 91 – 183 days

PAYE can be disregarded provided that the following is supplied:

  • all of the information as provided for 61 – 90 days; and

  • for non-US citizens and Green Card holders the employee must provide a statement from the other overseas Revenue authority confirming that they are resident in that other state for tax purposes during the period of work in the UK. This must be provided to the UK Inland Revenue by 31 May following the end of the tax year;

  • for US citizens the employee must provide evidence of continuing residence in the USA only;

  • a statement giving the following information from the employee by 31 May following the end of the tax year:

    • What is your nationality?

    • On what grounds do you claim this nationality.

    • Where were you born?

    • In which country do you usually live?

    • When did you arrive in the UK?

    • Have you visited the UK during the five years before the date entered above? If so, in that time did you spend:

    • More than 183 days in the UK in any UK tax year?

    • More than 364 days in the UK in total?

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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