Post-pandemic, the workforce is likely to return to higher levels of travel. Many employers overlook the importance of travel monitoring. We explain why it matters.
The pandemic has meant many employers put on hold their long term and regular assignment programs but now that the world is beginning to open up after the worst of Covid, business travel is on the increase and people are looking at new ways of working. Having a mobile workforce may help the employer reduce costs, compared to hiring permanent employees in all locations.
Many employers leave it up to the employee to make all their own arrangements for travel and accommodation; as a result they have very little insight about when and where the travel took place, or its purpose.
Informal business travel
Why does this happen? Often the business traveller is not on a formal assignment programme in a different work location, nor seconded to another host entity. As such, these individuals can be easily missed, and may not be included in immigration policies and organisational procedures.
Employers and employees often make assumptions about the tax requirements or overlook them completely. This can place both the individual and company at risk of penalties, fines and potentially more serious consequences. This may even affect the employer’s ability to conduct business in the future.
What can you do?
As an employer, it’s important you know where your employees are travelling to and what they are doing in a work capacity. Only then are you in a position to determine if all the reporting requirements are met.
It is important to have a programme in place to manage your business traveller population and associated risks efficiently and appropriately.
Some companies rely on travel or expense claim reports which may help to track the number of days abroad. However, the retrospective method means the appropriate steps may not have been taken for the company to meet its obligations.
Ideally, employees should notify the employer with details of planned business travel beforehand, for approval. There should be a pre-travel assessment to determine whether appropriate immigration requirements are met, and to flag any tax and social security issues. There also needs to be a central point in the UK that visiting individuals report to.
As well as tracking each visit, it is important to gather actual employee travel information on an ongoing basis. This is because host country liability may arise if individuals stay over a certain number of days cumulatively in each period.
Those who travel regularly for business should also inform their employer of any additional time they are spending in the country for leisure purposes. Days of physical presence, for whatever reason, count towards assessment for tax residency purposes. For example, tax treaty relief often limits the number of days in a rolling 12-month period, regardless of how many trips took place. The travel information captured should be reviewed regularly.
Technology and communication
Some employers ask employees to provide their whereabouts and work information on a regular basis. There are also IT solutions that simplify data gathering, such as mobile phone apps or software which tracks the GPS locations of employees.
To make sure employees will co-operate, it’s important to let explain the monitoring is taking place and why it’s so important. The company must also make sure they have a solid data protection policy, monitoring policies and a staff manual setting out the procedures.
Business visitors to the UK
Business travellers have been a key focus for HMRC. There are specific HMRC schemes available that simplify payroll reporting for UK visitors. These include the Short Term Business Visitor (STBV) Agreement, where there is a treaty between the UK and the other country and the Appendix 8 annual payroll for visitors from non-treaty countries. However, one of the conditions for using such an arrangement is to show HMRC that the company has a specific process to track business visitors.
Employers are responsible for keeping their employees well informed and for setting up a robust policy regarding overseas travel, together with engaging with HMRC for the relevant agreements. Any visitor who does not meet the conditions for simplified reporting must be identified immediately and reported on the UK payroll on a ‘real-time’ basis.
For more information on anything raised in this article, please contact Louise Fryer.