'New Reality' - UK Employee working remotely overseas
Discussion
I work for a UK organisation. For various CV19 related reasons, one of my team wishes to work remotely from a non-EU country for six months.
They will continue to have a UK address and bank account, and state they have every intention of returning to the UK in January next year. They are a knowledge worker who already works remotely from home, and they have the right to work in this country.
Technical, comms, GDPR and time differences have been addressed.
Are there any legal, tax or insurance issues I need to consider approving their request? This is a new one to HR and it's put them in a flat spin.
Cheers,
They will continue to have a UK address and bank account, and state they have every intention of returning to the UK in January next year. They are a knowledge worker who already works remotely from home, and they have the right to work in this country.
Technical, comms, GDPR and time differences have been addressed.
Are there any legal, tax or insurance issues I need to consider approving their request? This is a new one to HR and it's put them in a flat spin.
Cheers,
shoestring7 said:
Are there any legal, tax or insurance issues I need to consider approving their request? This is a new one to HR and it's put them in a flat spin.
Cheers,
I have no answers but there are going to be loads that need consideration.Cheers,
Tax residency status
Data protection law
Health insurance
Immigration law
Employment law
Employer liability
Health and Safety
Social Security
Payroll withholding
Corp tax (or equivalent) / permanent establishment
shoestring7 said:
I work for a UK organisation. For various CV19 related reasons, one of my team wishes to work remotely from a non-EU country for six months.
They will continue to have a UK address and bank account, and state they have every intention of returning to the UK in January next year. They are a knowledge worker who already works remotely from home, and they have the right to work in this country.
Technical, comms, GDPR and time differences have been addressed.
Are there any legal, tax or insurance issues I need to consider approving their request? This is a new one to HR and it's put them in a flat spin.
Cheers,
We have somebody similar. their working in Portugal, we've told them that after 3 months they're likely to be liable for local income tax and they need to find out how to resolve this. We've also had somebody move to France but she's now a Non-Dom anyway so we're paying her gross. From the Employers point of view we're deducting UK taxes and making payment into a UK bank account. H&S and insurance should be no different to anybody working from a UK address.They will continue to have a UK address and bank account, and state they have every intention of returning to the UK in January next year. They are a knowledge worker who already works remotely from home, and they have the right to work in this country.
Technical, comms, GDPR and time differences have been addressed.
Are there any legal, tax or insurance issues I need to consider approving their request? This is a new one to HR and it's put them in a flat spin.
Cheers,
AFAICS I don't think it's half as complicated as some people are making out. I'd say you need to make the Employee aware of the risks and let them sort them out.
dibblecorse said:
As mentioned above, its a minefield for tax reasons and benefits reasons, most wont cover extended time abroad, and aren't designed too, you run the risk of getting hit for tax twice, and will be a real nightmare if they are somewhere you don't have an entity ....
Do you mean the Employer getting hit for tax twice or the Employee? If the former then Im struggling to see how a foreign Govt could chase a UK employer for taxes given that we don't operate in their Area.Countdown said:
Do you mean the Employer getting hit for tax twice or the Employee? If the former then Im struggling to see how a foreign Govt could chase a UK employer for taxes given that we don't operate in their Area.
Both, as most countries like the UK have social pots (think NI) that employers have to contribute to for employees in country, also if you don't have an entity you can't be compliant as an employer.This may be worth a read:
https://www.litrg.org.uk/tax-guides/coronavirus-gu...
Countdown said:
AFAICS I don't think it's half as complicated as some people are making out. I'd say you need to make the Employee aware of the risks and let them sort them out.
Yeah, thats not going to be compliant, thats your responsibility as the employer to be compliant for your employees.bigandclever said:
Countdown said:
We have somebody similar.
Apart from them being in Europe and there for less than 6 months you mean? No-one can answer the OP without specifics, but getting the employee to work out what the employer’s liabilities will be is daft.
In relation to Employer Lability we’ve checked with our Tax advisors and our insurance advisors and they’ve said nothing additional to what we are obliged to comply with for our UK employees.
Countdown said:
bigandclever said:
Countdown said:
We have somebody similar.
Apart from them being in Europe and there for less than 6 months you mean? No-one can answer the OP without specifics, but getting the employee to work out what the employer’s liabilities will be is daft.
In relation to Employer Lability we’ve checked with our Tax advisors and our insurance advisors and they’ve said nothing additional to what we are obliged to comply with for our UK employees.
Edited by bigandclever on Tuesday 8th June 17:32
Countdown said:
AFAICS I don't think it's half as complicated as some people are making out.
You're right. It really isn't.From what the OP has described the person will be employed by a UK company, paid in Sterling into a UK bank account having paid tax and Ni to HMRC in the UK. Where the person does the work is (to a large extent) immaterial. This assumes that as the person is returning to the UK, their permanent address (as in where they are domiciled for tax) is in the UK. On this basis, it's no different to if you were fortunate enough to take a six-month holiday but jumped on the laptop a few hours each day to do a bit of work. You wouldn't even need a Work Visa.
The only things that the UK company needs to check is whether their insurance would cover the activities of the employee whilst abroad.
I have a friend who spends around 8 months a year in Portugal working on this basis and a colleague who has spent blocks of years leading teams in Indonesia, Egypt and Mozambique. IIRC, Egypt required the payment of a temporary residency fee. I myself have spent large chunks of time overseas but have never needed to change who I pay tax to.
bigandclever said:
shoestring7 said:
Are there any legal, tax or insurance issues I need to consider approving their request? This is a new one to HR and it's put them in a flat spin.
Cheers,
I have no answers but there are going to be loads that need consideration.Cheers,
Tax residency status
Data protection law
Health insurance
Immigration law
Employment law
Employer liability
Health and Safety
Social Security
Payroll withholding
Corp tax (or equivalent) / permanent establishment
I suspect it will be a balance of risk; we will likely slip under the radar, but there's a small risk that should something go wrong it'll be a s
tstorm. The thing is, the HR team gain no benefit from taking that risk, I on the other hand retain a valuable experienced member of staff, and don't have to search for a contractor - with all the potential for pain that involves.
The country in question is India, the employee is a national.
From memory the "permanent establishment" issue is relevant ONLY when the Employer is carrying out business (via the Employee) WITHIN the host country i.e. a Business Development role, setting up import/export/subsidiary/franchise. If the employee is working on his Employer's IT servers via a VPN the Employer doesn't need to set up a local entity.
Countdown said:
In relation to Employer Lability we’ve checked with our Tax advisors and our insurance advisors and they’ve said nothing additional to what we are obliged to comply with for our UK employees.
Indeed. A UK issued Employer's Liability policy would normally cover any employee of the policyholder, regardless of where they are working or living. So long as they continue to be paid by the UK company, then it should be fine. Can I suggest you obtain some proper advice on this. I advise on this from a tax and social security perspective for a living. It's not simple and bigandclever provided a very good initial list of things to consider just as a starting point. You need to use companies with the specialist knowledge in the various areas and ensure they have the global capability to answer the questions for both the UK and overseas locations. Overseas home working is probably the main area I'm currently working with my clients on as they work out what their responsibilities are and how flexible they can be whilst remaining compliant.
shoestring7 said:
Thanks. I can check most of those boxes, it's the Permanent Establishment & local law that is causing the bugbear. HR have asked a couple of external consultants; they've done that thing that mechanics do - suck their teeth and look worried without actually giving a definitive experience based answer.
I suspect it will be a balance of risk; we will likely slip under the radar, but there's a small risk that should something go wrong it'll be a ststorm.
The thing is, the HR team gain no benefit from taking that risk, I on the other hand retain a valuable experienced member of staff, and don't have to search for a contractor - with all the potential for pain that involves.
The country in question is India, the employee is a national.
Can you make them a contractor for 6 months? Tell them to set up a company in India that will invoice you. I suspect it will be a balance of risk; we will likely slip under the radar, but there's a small risk that should something go wrong it'll be a s
tstorm. The thing is, the HR team gain no benefit from taking that risk, I on the other hand retain a valuable experienced member of staff, and don't have to search for a contractor - with all the potential for pain that involves.
The country in question is India, the employee is a national.
The following is really bad advice but always consider that HR & tax will always say no or put so many ifs/buts/maybes out there that it is effectively no. They are highly risk adverse, sometimes for good reason, but often not.
I may or may not have worked for a large international company in the past where I may have been on a "business trip" for 9 months. This business trip may have had trips back to the UK to comply with visa rules in force. Since I wasn't "working" there I did not appear on their tax radar. I'm sure had the request been made of HR & tax they would have told us what the rules were & told us we couldn't do it.
I may or may not have worked for a large international company in the past where I may have been on a "business trip" for 9 months. This business trip may have had trips back to the UK to comply with visa rules in force. Since I wasn't "working" there I did not appear on their tax radar. I'm sure had the request been made of HR & tax they would have told us what the rules were & told us we couldn't do it.
You need professional advice based on the country and what the employee will be doing. I have used Deloitte and it costs at least £5k per case for a full analysis. Each country has different rules and since Brexit the position with EU countries has become much more complicated, so for example, the chap mentioned above that used to work 8 months a year in Portugal could be in for a big shock. The risk of being found out is low but the consequences are high. There are not many other areas that an employer would say I know it is probably against the law but let’s just do it anyway. You risk creating tax liabilities for both the employer and the employee, it is more than a little inconvenient!
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