What You Need to Know about the UK’s Short Term Business Visitors Agreement (STBVA)

December 10, 2020
4 mins read
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Before exploring this topic in greater detail, let’s first establish what we mean by short term business visitors (STBV). For employment purposes, STBVs are individuals who make business trips to the UK but are not resident in the UK for tax purposes. Whether an individual is a UK resident usually depends on how many days they spend there in the tax year.  Many employers mistakenly assume that a short-term business visitor is taxed in their home country, and therefore, there is neither a UK tax liability nor any reporting requirements for the UK host employer. This is rarely the case.


Employers are responsible for STBVs


UK companies receiving business visitors from overseas must operate PAYE on the UK workdays of those visitors. This may be due from the first day of a visit. If the business visitor is not liable to UK tax, but PAYE has been operated, a self-assessment tax return is filed at the end of the tax year to claim all the PAYE back.

In recognition of the additional burden on UK employers, an Appendix 4 agreement grants a relaxation of the usual PAYE rules for business visitors to the UK and allows the UK company to self-assess whether tax is due.


What conditions must exist to meet Appendix 4 criteria?

There are 4 criteria:

  • The individual must be resident in a country with which the UK has a relevant Double Taxation Agreement (DTA)
  • The individual must be working for a UK company or a UK branch of an overseas company but remains an employee of an overseas company
  • The individual is expected to stay 183 days or less than 12 months
  • The UK company must not bear the cost of employment. This includes paying for travel and subsistence expenses while the employee is in the UK.


Any employee who cannot fulfill the conditions above should have PAYE operated from day 1.

The treatment for National Insurance contributions (NIC) of employees coming to the UK is covered in the CWG2 Employer Further Guide to PAYE and NICs.


A deep dive into Appendix 4 arrangements


Appendix 4 applies where usually there is a requirement on the part of the host employer, UK branch, or legal employer to make PAYE deductions. It only applies to employees who are not UK residents for tax purposes or, if a UK resident, is a treaty resident in the treaty partner country. In all cases involving a short-term assignment of employees to the UK, the employer must implement some form of an internal reporting system to keep an accurate record of employees visiting the UK on business.  Employees must periodically report the number of days spent in the UK on business. Also, employees should not spend more than 30 days intermittently in the UK in any 12-month period without reporting this to their employer.

All records that are kept under this arrangement are within Regulation 97 IT (Pay As You Earn) Regulations 2003 and must be retained for the time limits that apply and produced for inspection.

If liable on payments of PAYE income made to an employee, an employer must pay the tax on each payment. Late payment of PAYE tax accrues interest in the usual way. Late filing and late payment penalties will not apply where HMRC accepts that the employer backdated the PAYE and filed the FPS as soon as could be reasonably expected following a change in circumstances preventing an employee from being included in this arrangement.

Should it become apparent that PAYE is not being applied in the case of employees who do not satisfy the relevant criteria, HMRC reserves the right to insist that PAYE be operated strictly for all employees from day 1.



Handling employees from non-treaty countries 


The UK’s network of double tax treaties is extensive but not universal. Where an employee from a non-treaty country, such as Brazil, works for a UK host employer in the UK, a PAYE obligation arises from the first UK workday. The tax cost can pale into insignificance alongside the administrative complexities associated with RTI for PAYE, especially if the employee is entitled to personal allowances or is not highly remunerated.


Reporting and the 60-day rule


The 60-day rule applies to employees who are in the UK for up to 59 days only. It means that the cross charge to the UK, which would typically deny relief under the DTA, is not conclusive if the period of work in the UK is less than 60 days. To be eligible, employers must show that the employees are on an overseas payroll, and the period (up to 60 days) does not form part of a more substantive period.

As a result of this rule, PAYE can be disregarded in certain circumstances. As it is an administrative easement, it operates under a slightly narrower set of situations. There are recording and reporting obligations that depend on the amount of time an individual has spent in the UK tax year.


The steps the process takes


The UK employer applies to HMRC for both non-UK employees coming to the UK for business and UK employees assigned to work abroad and spending some time back in the UK performing work for the non-UK employer.

Upon the grant of the approval to operate the Appendix 4 modified payroll scheme, the employer is required to make annual reporting by the 31 May following the end of the tax year in question providing the details for each of the STBV based on the time they spent in the UK in the UK tax year.

This agreement continues to be in force until either of the parties (employer or HMRC) change or terminate it.


If you have any additional questions about STBVA, please reach out to our Tax Team.

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