In today’s globally connected economy, it’s increasingly common for UK companies to collaborate with overseas colleagues. But when international staff visit the UK, whether for training, secondments or operational support, companies can unintentionally expose themselves to UK tax risks if proper reporting and compliance obligations are not observed.

This article explores key considerations UK businesses must be aware of when hosting overseas staff and uses a recent case study to demonstrate how these tax risks can arise in real-world scenarios.

Why Hosting Overseas Employees Isn’t Just a Logistical Concern

From a business operations perspective, it might seem straightforward to welcome colleagues from an overseas branch or sister company for a few weeks or months. However, HMRC does not necessarily view these visits as casual or inconsequential.

Where overseas employees work in the UK, even temporarily, UK tax and social security rules can be triggered, and the company facilitating their stay may have a number of reporting and withholding obligations.

Failure to recognise and act on these obligations could result in unexpected PAYE liabilities, penalties, and compliance issues.

Case Study: Understanding the Risks Through a Real Scenario

We recently advised a UK company that is part of a wider international group. As part of its operational needs, the UK entity hosted several employees from an overseas group company for short-term business visits.

The employees, who remained tax resident in their home country, visited the UK for periods ranging from under two weeks to several months. Their purpose was to provide hands-on training, support operational troubleshooting, and assist in knowledge transfer to the UK workforce.

During their time in the UK, they were accommodated in local housing arranged and paid for by the UK company.

At first glance, this seemed like a straightforward internal group arrangement. However, the business recognised the potential for UK tax risks and rightly sought professional advice to assess their exposure and ensure full compliance.

Key Areas of UK Tax Exposure to Consider

If your business is hosting overseas staff, even temporarily, it’s vital to consider the following:

1. PAYE and National Insurance

UK employers are usually required to operate PAYE on earnings paid to employees who work in the UK. This can apply even when the employee is paid by an overseas entity. If the employee performs duties in the UK, the host entity may become the ‘economic employer,’ triggering PAYE and NIC obligations.

However, relief may be available under certain Double Tax Treaties (DTTs), typically where the individual is present in the UK for fewer than 183 days and other criteria are met. But even in these cases, HMRC may expect annual reporting under the Short-Term Business Visitor (STBV) arrangement.

2. Accommodation and Benefits-in-Kind

Providing accommodation or other benefits to overseas staff can potentially create BIK reporting obligations, with associated tax and NIC liabilities, unless exemptions apply. Proper documentation is essential to demonstrate the business purpose and avoid unintended consequences.

3. Permanent Establishment and Corporation Tax

If the visiting employees are considered to be habitually concluding contracts, negotiating deals, or significantly contributing to the core business in the UK, their presence could unintentionally create a permanent establishment for the overseas company. This would expose the overseas entity to UK corporation tax on profits attributable to the UK presence.

Even in cases where no PE is ultimately deemed to exist, HMRC may still expect evidence and a clear narrative outlining why this conclusion has been reached.

How Williamson & Croft Can Help

International staff visits require more than just a flight and a hotel booking, they require careful tax planning and compliance to avoid hidden liabilities.

We worked closely with the business in this case to conduct a comprehensive tax risk assessment, covering:

  • PAYE, NIC, and potential benefit-in-kind obligations.
  • Review of eligibility for STBV reporting arrangements with HMRC.
  • Analysis of corporation tax exposure, including the PE risk.
  • Recommendations for process improvements to manage future visits compliantly.

Whether you host one overseas visitor or a rotating team, these risks can apply.

It’s vital to take a proactive approach and put appropriate controls and reporting in place from the start.

Don’t Let Short-Term Visits Create Long-Term Tax Problems

If your UK company is hosting overseas employees, even for brief periods, don’t assume that tax rules don’t apply.

Ignorance of UK obligations can lead to costly mistakes, audits, and reputational risk.

Get in touch with our specialist tax team today for a tailored consultation. We’ll help you assess your exposure, mitigate risk, and ensure full HMRC compliance, so you can focus on your business, not bureaucracy.

Contact us now to book a confidential discussion with one of our tax experts.