As COVID-19 continues to affect our daily lives and we find ourselves working and living in highly unusual circumstances, we have much to contend with.
Whilst there are decisions to be made almost on a daily basis in terms of how we go about our lives, take care of those important to us and adapt our living conditions, we must also continue to make sure we fulfil business needs.
For globally mobile employees and their employers, tax and social security legislation can be complicated to navigate at the best of times. In current circumstances with restrictions on travel and social distancing, people who are working either away from home on secondment or whose role involves international travel may find themselves stuck in countries they would not normally have been in for any length of time. The length of a formal secondment may change.
For companies looking to expand into the UK or start an overseas venture the current climate will have meant putting things on hold/revising the business plan.
It is important that employers are aware that current circumstances may mean a change in what needs to be done in each country to ensure both employee and employer tax compliance, not just in the UK but elsewhere in the World.
HMRC have issued some guidance in terms of UK tax residency and extended some of the filing deadlines as they acknowledge firms may have difficulty in collating and submitting the information that is required.
Special Arrangement Payroll and the new Appendix 8 Arrangement
This is the annual payroll arrangement with HMRC that permits a company to run a payroll at the end of the UK tax year to capture visitors from non-treaty countries of less than 30 days.
Any UK group company that has visitors from a non treaty country e.g. Bermuda has a payroll obligation from day 1 and given that visitors may come and go throughout the year, the burden of adding them to payroll each time is significant. It is possible to agree with HMRC to submit just one payroll return at the end of the year that captures all visitors for less than 30 days from non treaty countries, calculate and pay over the UK tax that is due on the UK workdays.
The submission date for the 2019/20 payroll and payment of tax was 30 April 2020. However, HMRC has extended the deadline both for running the payroll and making payment of tax due to 31 May 2020.
The new Appendix 8 scheme
HMRC is formalising the special arrangement payroll and to do this it is ending the special arrangement scheme that ran until April 2020 and replacing it with an Appendix 8 scheme. Letters have been sent to all companies that operate a special arrangement payroll together with a form to either sign up for the new Appendix 8 scheme or to cease their scheme. The original deadline for submission of this form was 6 April 2020 but HMRC have removed that deadline and whilst they have not yet provided details of a revised date, it is important to get the application/cancellation in as soon as possible.
Forms can be submitted by email to the following address: email@example.com
Changes reflected in the new agreement include the increased limit to 60 days from 30 days for visitors from non-treaty countries and the filing/payment deadline has been extended to 31 May from 30 April following the end of the tax year.
Appendix 4 Short Term Business Visitors
The annual reporting deadline for companies that have a Short Term Business Visitors Arrangement with HMRC is 31 May following the end of the tax year. HMRC have extended this deadline to 31 July 2020.
Appendix 7A/7B – NIC settlement returns for employees working in the UK from abroad and those from the UK working abroad
This scheme is for employers who operate PAYE under Employment Procedures Appendix 6 (modified payroll) tax equalisation.
The deadline for returns and payments was 31 March 2020 but this has been extended to 31 May 2020.
Payments on Account
Individuals who are due to make a payment on account to HMRC as at 31 July 2020 have been granted additional time to pay with HMRC not requiring payment until 31 January 2021. We recommend that payment is made by 31 July 2020 if at all possible but it is good to know there is some flexibility in this.
Reminder of HMRC’s approach to exceptional circumstances and residence in the UK
HMRC has added to its guidance on the Statutory Residence Test (SRT) to allow for people unexpectedly in the UK. The rules remain the same, however COVID-19 has been classified as falling in the “exceptional circumstances” criteria and as such an individual who finds themselves unexpectedly in the UK for more time than they originally planned can be in the UK for up to 60 days per tax year before triggering a UK tax presence. It is important to remember that this is per tax year, so the day count reset as of 6 April 2020 as we began the new UK tax year. The 60 days is a limit and not an allowance or entitlement. Days spent in the UK over the 60 day limit count as a day of presence for the purposes of the SRT.
An individual will need to establish if any time they spend in the UK can be ignored for the purposes of the various counts of their presence in the UK for the SRT, due to exceptional circumstances.
Specifically, an individual will qualify under exceptional circumstances related to COVID-19 if they:
are quarantined or advised by a health professional or public health guidance to self-isolate in the UK as a result of the virus;
find themselves advised by official Government advice not to travel from the UK as a result of the virus;
are unable to leave the UK as a result of the closure of international borders; or
are asked by their employer to return to the UK temporarily as a result of the virus.
If you have any questions relating to any topic covered in this article, please get in touch.