With the COVID-19 pandemic sweeping the world, there was a 72% decline in the number of business visitors to and from the UK during 2020.

Despite the emergence of new COVID-19 variants, many borders have reopened globally and business visits to the UK are on the increase. Given this, employers are revisiting the immigration and employment tax rules. In this article, Lee McIntyre-Hamilton and Sharmila Mehta provide their insight on the key considerations for employers who are managing business visitors.

The challenge of business visitors for HR

Short-term business visitors have always been a difficult area for employers both in the UK and globally. The first challenge for UK employers is knowing when non-UK employees are physically working in the UK.

Once an appropriate tracking system has been put in place, employers often then struggle to work out what is required to ensure the UK organisation and the employee remain compliant. This is not surprising given the often nuanced and complex rules and the fact that the immigration rules are wholly separate from the rules for employment tax.

Despite the challenges, the compliance aspects of business visits to the UK are one that employers unfortunately must face in order to avoid potentially substantial financial penalties. For employment tax, for example, HMRC can normally ‘look back’ up to four years when assessing any underpayment of PAYE that is deemed to be ‘careless’. The limit is six years for National Insurance contributions.

For immigration failures, there can also be severe adverse implications for employers. The travelling employee can face questions at the UK border, potentially being detained for several hours and at worst, being returned on the next flight out of the UK. There can also be damage to the reputation of the company as well as disruption to the business.


The key to successful UK entry as a Business Visitor is to plan ahead – to know what to expect, understand the process and above all, have a basic understanding of the UK’s Immigration Rules for Visitors.

All travellers to the UK are making an immigration application – whether on paper, in advance of travel in the case of Visa nationals, or in person and verbally for Non-Visa nationals when answering questions asked by UK Immigration Officers at the border.

In order to satisfy border control of the visitor’s intention, he or she must be aware that only certain activities are permitted under the Immigration Rules. These include:

  • attending meetings;
  • giving a one-off or short series of talks and speeches provided these are not organised as commercial events and will not make a profit for the organiser;
  • negotiating and signing deals and contracts;
  • attending trade fairs, for promotional work only;
  • carrying out site visits and inspections; and
  • gathering information for their employment overseas.

However, work is not permitted. This includes:

  • taking employment in the UK;
  • doing work for an organisation or business in the UK;
  • establishing or running a business as a self-employed person;
  • doing a work placement or internship;
  • direct selling to the public; and
  • providing goods and services.

If an employee is planning to work, the employer should consider whether approval as a Skilled Worker or under the Intra Company Transfer rules may be more suitable.

Employment tax

At first it may sound a little counterintuitive that an employee can be employed in a country overseas, resident in that country and paid from that country, and yet trigger a UK income tax and PAYE obligation when they perform business visits in the UK.

Non-resident individuals are normally subject to UK income tax on the income they earn in respect of the days they physically spend working in the UK unless the duties are considered ‘incidental’. This applies irrespective of the location from which they are employed and paid.

So, for example, if an employee is resident in France but comes to work in the UK for a month or two, then HMRC has the right under UK legislation to impose income tax on income earned in respect of those duties in the UK, even though the income is being paid from an employer in France.

Thankfully, the UK double tax treaty network can provide an exemption from UK income tax provided that certain conditions are met.

Under most treaties that the UK has with other countries, there are provisions that can exempt short-term business visitors from triggering a tax liability in the UK, providing they meet certain core conditions. Whilst the specific terms can differ from treaty to treaty (and so the relevant treaty should be reviewed), these conditions are broadly that:

  • the employee should not spend more than 183 days in any 12-month period in the UK;
  • the employee should not be paid any remuneration from or by an employer that is resident in the UK; and
  • the cost of the employee’s remuneration should not be borne by a permanent establishment (i.e. broadly, a deemed corporate presence or branch) that the employer has in the UK.

The UK adheres to what is known as the ‘economic employer concept’. In summary, where HMRC can show that the employee has, in effect, become economically employed by a company in the UK, this would scupper any treaty exemption. For example, if an individual was employed in Australia via an Australian employer but visited the UK for four months and the UK subsidiary of the Australian company bore the “risk and rewards” of the business visit (often evidenced by a recharge of remuneration costs from the Australian to the UK company), then this would likely scupper any claim for treaty exemption in the UK.

Implications for PAYE

Even though an employee may be exempt from income tax in the UK due to the terms of the relevant double tax treaty, this does not mean that no PAYE is required.

Unless the UK ‘host employer’ has a Short Term Business Visitors Agreement (“STBVA”) or “Appendix 4” as it is known by HMRC, PAYE is required in all cases where business visitors are working for the UK entity and the duties are more than incidental. In this case, the employer would need to operate PAYE and then the employee would be required to file a UK tax return to claim exemption under the relevant double tax treaty so that they can obtain a refund of PAYE.

Of course, there are other practical difficulties in this approach since business visitors are normally paid via a non-UK payroll and so any PAYE would need to be calculated on earnings paid overseas and via a shadow payroll in the UK (i.e. a payroll that does not pay any income but is set up solely to calculate and settle the required withholding).

Where a UK employer has a STBVA with HMRC, the obligation to operate PAYE may be relaxed in cases where, subject to the terms within the STBVA itself, employees meet the terms to be exempt from income tax under a double tax treaty. In return, HMRC requires the UK employer to furnish HMRC with certain information by 31 May following the end of each tax year. Employers should note that the STBVA is valid for PAYE only and the NIC position should also be considered.

Where business visitors come to the UK from a country with which the UK does not have a double tax treaty, PAYE will be due in respect of all duties that are not incidental. Where PAYE is required for business visitors and the number of UK workdays during a tax year is 60 or less, employers may apply for a separate agreement (“Appendix 8”) from HMRC in order that PAYE can be paid after year end (i.e. rather than being required to operate PAYE on a contemporaneous basis).