Proposals put forward by the government on employment tax compliance and reporting obligations for those coming to the UK for short business trips (“short term business visitors”) do not go far enough and may adversely affect small businesses.
“The changes might help some employers in limited circumstances, but fail to address some key issues for business” said Mark Abbs, a Partner at tax and advisory firm Blick Rothenberg firm.
He added: “The rules need to be more straightforward and much easier for employers to understand especially for small businesses where compliance can be a disproportionate burden and the rules can be difficult for non-specialists to understand. They also need to have greater alignment between the visa and tax rules.”
Mark said: “The proposals put forward by the Government are aimed at helping to make compliance and reporting easier for employers. However, they look only at two narrow and specific areas which won’t benefit many businesses: extending a payroll concession to visitors employed by a non-UK branch and allowing employers to settle PAYE at year-end where a business visitor does not qualify for the concession.”
He added: “The rules for immigration are also completely separate from the rules for tax when it comes to short term business visitors. This leads to confusion. For example, the definition of ‘incidental duties’ for visa purposes is different from the definition of ‘incidental duties’ for PAYE purposes.”
Mark said: “The compliance regime for the smallest of UK owner-managed businesses is the same as for the largest of UK multi-national corporations. Whilst large corporates will normally have the time and resources to invest in understanding the rules and adhering to the obligations, small businesses typically struggle in this regard.”
The changes should however go much further to help both business and the UK to be more competitive when attracting overseas investment. Mark said: “We have done some international research which demonstrates that the tax and payroll compliance is much simpler and more relaxed in other countries when compared to the UK. The UK should conduct a more comprehensive overhaul of the short term business visitor rules so that it works better for everyone.”