Once a PAYE obligation has been accepted, host employers will want to identify persons who are exempt from UK tax under the provisions of a relevant agreement and for whom the PAYE obligation can be waived by applying an agreement to Schedule 4. An analysis for the stBV declaration often begins with whether a person is economically employed in the UK, but should instead consider whether there is a PAYE obligation that a Schedule 4 agreement would need to move. “Work for” usually requires a level of management and control that is not strictly necessary for economic employment (see the notes of the joint meeting of expatriates on taxation and the NIC of 7 July 2014 for more details). “Economic employment” is actually an integration test and which entity bears the risks and opportunities associated with serving an employee. While both concepts often apply at the same time, they are not required to do so, and many UK organisations collect data on all STBVs without checking whether people are “working” for them, which can make related reporting more expensive than it should be. The “60-day rule” applies in practice only for a maximum of 59 days, as it has always covered “less than 60 days” and is subject to interpretation, as explained below. It follows a statement made by the then Minister of Finance in July 1996 during a Standing Committee debate on the draft double taxation convention between the United Kingdom and Argentina. Tax Bulletin 10/96 provides the following overview: E4.1330 Special Pay Rules for Expatriates – Short-Term Business Travellers to the UK (“EP Agreement Annex 4”)PAYE withholding must be applied from day one to employees visiting the UK and working for a UK company (note that the term “work for” is not specified in the legislation, although generally all visits, which involve interaction with UK society, by HMRC according to its interpretation of B. the wording). This withholding tax can be eased by entering into a short-term business visitor agreement (STBV) with HMRC (also known as the “EP Annex 4” agreement), which allows employers to effectively expect a tax exemption on the employee`s income in the UK under an appropriate double taxation agreement.
Until the 2012/13 tax year, HMRC agreed that employers could apply contractual facilitation where appropriate, provided that days spent in the UK were adequately tracked and that data was stored in support of a contractual claim, even in the absence of an STBV agreement. However, as of the 2013-2014 taxation year, HMRC stated that this practice no longer applied and that for the CAFE flexibility, employers had to have an STBV agreement or keep sufficient information to support a double taxation agreement. These documents must contain a signed contractual claim of the employee containing a certificate of residence from the other contracting country. Note that STBVs that have 60 working days in the UK or less may be eligible for the STBV Annex 8 agreement from 6 April 2020. For more details, see E4.1330A.General – Company The agreement imposes a strict limit, where anyone with more than 30 working days in the UK cannot be included in the tax year, but as a test for working days, it may be easier for an employer to manage them than the days of attendance that count for the purposes of the contract. An employer can only have one of these plans, but it can cover any number of employees as long as they all meet the relevant criteria. It also applies an annualized cumulative calculation of the PAYE for month 12, which minimizes the need to pay taxes that are ultimately not due. A gross mark-up is generally not required, except for services provided in the UK, unless the person is subject to formal tax equalisation. This withholding tax can be eased by entering into a short-term business visitor agreement (STBV) with HMRC (also known as the “EP Annex 4” agreement), which allows employers to effectively expect a tax exemption on the employee`s income in the UK under an appropriate double taxation agreement.
Notwithstanding what has been said above about the assumption of costs, it is also possible to request the inclusion of a particular worker in an Annex 4 agreement, even if his costs are incurred in the United Kingdom, provided that it can be demonstrated that he is economically employed outside the United Kingdom. These requests must be made by employers on a case-by-case basis before workers can be covered by the Annex 4 agreement, so that the old criterion of the OECD model (where costs are actually incurred) and the new test (where the person is economically employed) are effectively applied before the exemption from the contract is allowed. .