For the purpose of this article it is important to define the following technical terms:
- Remuneration: has its widest possible meaning and includes salary, wages, benefits, allowances and expenses
- ‘Ultimately borne’: means the company finally bearing the cost after all recharging of any nature
Before going any further, we should acknowledge that a PAYE obligation will not arise for a UK entity just because an individual from a related organisation visits the UK on business, but only where such an individual “works for” it within the meaning of section 689 ITEPA 2003.
An analysis for short term business visitors reporting will often start with whether someone is economically employed in the UK, but should instead consider whether there is a PAYE obligation that an Appendix 4 agreement would be needed to displace. This arrangement provides that PAYE can be disregarded in certain circumstances.
This arrangement must only be applied where individuals are
- 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 the equivalent) is likely to be competent
- Coming to work in the UK for a UK company or the UK branch of an overseas company, or are
- Legally employed by a UK resident employer, but economically employed by a separate non-resident entity
- Expected to stay in the UK for 183 days or less in any twelve month period
Provided that it can be shown that for specifically named employees whose presence in the UK is 60 days or more, the UK Company or branch will not in fact ultimately bear the remuneration specified.
Where agreement is reached and in all other aspects the employee falls within the guidelines, then that part of the remuneration not ultimately borne by the UK Company or branch can fall within this arrangement.
These arrangements will not apply where the expense of the remuneration is passed on to another UK Company or branch and not recharged overseas.
For those whose presence in the UK is 59 days or less, it is only necessary to show that the employees were paid via a non-resident employer’s payroll.
Where an employee otherwise falling within this arrangement receives remuneration borne by companies in different countries then:
- Remuneration not ultimately borne in the UK – falls within this agreement
- Remuneration ultimately borne in the UK – does not fall within this agreement unless the presence in the UK is for 59 days or less and those days do not form part of a longer period or HMRC Office has agreed a dispensation for it.
