'New Reality' - UK Employee working remotely overseas
Discussion
I case anyone is following; the employee's request was turned down.
The reasoning was that the company was advised by a tax consultant based in India that the employee would incur UK and Indian PAYE liabilities, and the (UK) payroll company was unable to manage transfers to the Indian tax authorities.
The reasoning was that the company was advised by a tax consultant based in India that the employee would incur UK and Indian PAYE liabilities, and the (UK) payroll company was unable to manage transfers to the Indian tax authorities.
shoestring7 said:
I case anyone is following; the employee's request was turned down.
The reasoning was that the company was advised by a tax consultant based in India that the employee would incur UK and Indian PAYE liabilities, and the (UK) payroll company was unable to manage transfers to the Indian tax authorities.
As expected really, and I'm guessing the company does not have an Indian entity that they can hire them within, although that would be within Indian salary ranges, can't have your cake and eat it on that one as many have tried in the past.The reasoning was that the company was advised by a tax consultant based in India that the employee would incur UK and Indian PAYE liabilities, and the (UK) payroll company was unable to manage transfers to the Indian tax authorities.
Just to awaken this thread; it seems Ocado are allowing it for a month for some staff.
https://www.bbc.co.uk/news/business-58143560
vaud said:
Just to awaken this thread; it seems Ocado are allowing it for a month for some staff.
https://www.bbc.co.uk/news/business-58143560
90% of tech firms will allow that, a month triggers nothing so is immaterial on all fronts, not sure it needed a press release !https://www.bbc.co.uk/news/business-58143560
shoestring7 said:
I case anyone is following; the employee's request was turned down.
The reasoning was that the company was advised by a tax consultant based in India that the employee would incur UK and Indian PAYE liabilities, and the (UK) payroll company was unable to manage transfers to the Indian tax authorities.
Assuming your company isn't registered (incorporated) in India I'm struggling to see how it can have PAYE liabilities. It literally doesn't exist as an entity in India. The individual who is working for you can have tax liabilities but they should be able to deal with those via the Indian equivalent of Self assessment (A quick Google suggests that a DTT exists between the UK and India so it's not as if they would be paying tax twice over).The reasoning was that the company was advised by a tax consultant based in India that the employee would incur UK and Indian PAYE liabilities, and the (UK) payroll company was unable to manage transfers to the Indian tax authorities.
I don't know if this is a comparable example but
1. If I buy something from a UK company they pay the VAT.
2. If I buy something from abroad I'm responsible for paying any VAT and/or import taxes. HMRC won't go after some Chinese retailer for the tax.
TL:DR I don't see how an entity which doesn't exist in a foreign country can be pursued for tax in that foreign country.
vaud said:
True, but FMCG / retail is an industry with a perception of "you will be in the office" so I guess it is some free PR.
Except Ocado Group in this instance isn't FMCG .. its tech for retail as evidenced in these two statements from the article:"Staff at Ocado Group, the tech firm behind the online grocer, can now work abroad remotely for one month a year."
"The scheme does not apply to Ocado Retail, the online supermarket, which is jointly owned by Ocado Group and Marks & Spencer."
Neither is taken out of any context.
One month will almost never trigger nothing so as said above…hardly merits a press release.
In my company the big one we’re worried about is being deemed to be employing someone in country X by virtue of them working from there, then suddenly being liable for employers payroll/social security taxes.
In my company the big one we’re worried about is being deemed to be employing someone in country X by virtue of them working from there, then suddenly being liable for employers payroll/social security taxes.
Honestly if you’re a small company no-one has heard of and you don’t take the piss then I think the risk is pretty low. (Who’s gonna find out? Who’s gonna ask?)
I think the risk for large public companies and multi-nationals is higher - because it’s eminently possible/likely that they get audited by one tax authority or another on exactly this topic. In Europe I could imagine the Greek, French, Spanish or Portuguese authorities going on a fishing expedition and just deciding to pick some professional services firms.
I think the risk for large public companies and multi-nationals is higher - because it’s eminently possible/likely that they get audited by one tax authority or another on exactly this topic. In Europe I could imagine the Greek, French, Spanish or Portuguese authorities going on a fishing expedition and just deciding to pick some professional services firms.
brickwall said:
One month will almost never trigger nothing so as said above…hardly merits a press release.
In my company the big one we’re worried about is being deemed to be employing someone in country X by virtue of them working from there, then suddenly being liable for employers payroll/social security taxes.
Just out of interest -In my company the big one we’re worried about is being deemed to be employing someone in country X by virtue of them working from there, then suddenly being liable for employers payroll/social security taxes.
1. Does your Company have a base in Country X?
2. Do you pay your Employee's salary into a UK bank account or into an account in Country X?.
3. What would you do if your employee spent 6 months in the UK and 6 months in Country X every year?
I can see how the individual might get prosecuted by the Tax Authorities (of the Country they are based in) if he was earning income from abroad and not declaring it (in exactly the same way as if i was receiving income from my dad's business which is incorporated broad). However I cannot understand how tax authorities in one country can pursue a Company registered in another country when the company isn't doing any kind of business in the foreign country.
Re (3) above; one of our Non Exec Directors is no longer domiciled in the UK. They've got permission from HMRC to be paid gross (without deducting tax/NI). They're based in France but have homes elsewhere in the World. "We" would not be prosecuted for not deducting taxes or social security payments by whichever country they decided to work from.
Countdown said:
Just out of interest -
1. Does your Company have a base in Country X?
2. Do you pay your Employee's salary into a UK bank account or into an account in Country X?.
3. What would you do if your employee spent 6 months in the UK and 6 months in Country X every year?
I can see how the individual might get prosecuted by the Tax Authorities (of the Country they are based in) if he was earning income from abroad and not declaring it (in exactly the same way as if i was receiving income from my dad's business which is incorporated broad). However I cannot understand how tax authorities in one country can pursue a Company registered in another country when the company isn't doing any kind of business in the foreign country.
Re (3) above; one of our Non Exec Directors is no longer domiciled in the UK. They've got permission from HMRC to be paid gross (without deducting tax/NI). They're based in France but have homes elsewhere in the World. "We" would not be prosecuted for not deducting taxes or social security payments by whichever country they decided to work from.
A NED is very rarely an employee and will be on a consulting contract of some description or another, hence the HMRC ruling, his/her tax treatment falls under his/her own administrative responsibilities, not that of those engaging them, not a lot different to inside / outside IR35 in many instances.1. Does your Company have a base in Country X?
2. Do you pay your Employee's salary into a UK bank account or into an account in Country X?.
3. What would you do if your employee spent 6 months in the UK and 6 months in Country X every year?
I can see how the individual might get prosecuted by the Tax Authorities (of the Country they are based in) if he was earning income from abroad and not declaring it (in exactly the same way as if i was receiving income from my dad's business which is incorporated broad). However I cannot understand how tax authorities in one country can pursue a Company registered in another country when the company isn't doing any kind of business in the foreign country.
Re (3) above; one of our Non Exec Directors is no longer domiciled in the UK. They've got permission from HMRC to be paid gross (without deducting tax/NI). They're based in France but have homes elsewhere in the World. "We" would not be prosecuted for not deducting taxes or social security payments by whichever country they decided to work from.
dibblecorse said:
A NED is very rarely an employee and will be on a consulting contract of some description or another, hence the HMRC ruling, his/her tax treatment falls under his/her own administrative responsibilities, not that of those engaging them, not a lot different to inside / outside IR35 in many instances.
I gave the example of the NED because they often have multiple bases. We also have Employees who have been working abroad (at holiday homes/flats). We have informed them that they might be liable for local taxes if they stay over a certain period of time. However I'm still struggling to see how the Portuguese or Spanish tax Authorities could chase us (the company) - we don't operate in their country, the employees are working on UK based servers via VPN, they're being paid into UK bank accounts. in fact I'm struggling to see how they would even know that we were the Employers if the Employee didn't tell them....Countdown said:
brickwall said:
One month will almost never trigger nothing so as said above…hardly merits a press release.
In my company the big one we’re worried about is being deemed to be employing someone in country X by virtue of them working from there, then suddenly being liable for employers payroll/social security taxes.
Just out of interest -In my company the big one we’re worried about is being deemed to be employing someone in country X by virtue of them working from there, then suddenly being liable for employers payroll/social security taxes.
1. Does your Company have a base in Country X?
2. Do you pay your Employee's salary into a UK bank account or into an account in Country X?.
3. What would you do if your employee spent 6 months in the UK and 6 months in Country X every year?
I can see how the individual might get prosecuted by the Tax Authorities (of the Country they are based in) if he was earning income from abroad and not declaring it (in exactly the same way as if i was receiving income from my dad's business which is incorporated broad). However I cannot understand how tax authorities in one country can pursue a Company registered in another country when the company isn't doing any kind of business in the foreign country.
Re (3) above; one of our Non Exec Directors is no longer domiciled in the UK. They've got permission from HMRC to be paid gross (without deducting tax/NI). They're based in France but have homes elsewhere in the World. "We" would not be prosecuted for nots deducting taxes or social security payments by whichever country they decided to work from.
Let’s say
1. I am an entirely U.K. based company - I have no legal entity outside the U.K., all my business is done under U.K. law., most of my customers are U.K. based, and what few suppliers I have are also overwhelmingly U.K. based.
2. Country X has some rule in their tax code that says “if an individual conducts work from this country for more than 90 days a year, then they fall under employment regulations of this country for the duration of their time here.”
In this instance - yes the employee may be liable for income tax etc and that’s their problem. But suddenly the employer is liable for whatever employers payroll/social security taxes there are, employment regulations, working visas,…it all gets complicated.
For the employer I can completely say “we do not want to burden ourselves with the costs and hassle of having to comply (or even check whether we need to comply) with the employment regulations and tax codes of foreign countries” - and putting policies around this for their employees.
brickwall said:
You’re missing my point. I’m not saying it’s impossible - I’m saying that for many companies the risk outweighs the reward.
Let’s say
1. I am an entirely U.K. based company - I have no legal entity outside the U.K., all my business is done under U.K. law., most of my customers are U.K. based, and what few suppliers I have are also overwhelmingly U.K. based.
2. Country X has some rule in their tax code that says “if an individual conducts work from this country for more than 90 days a year, then they fall under employment regulations of this country for the duration of their time here.”
In this instance - yes the employee may be liable for income tax etc and that’s their problem. But suddenly the employer is liable for whatever employers payroll/social security taxes there are, employment regulations, working visas,…it all gets complicated.
For the employer I can completely say “we do not want to burden ourselves with the costs and hassle of having to comply (or even check whether we need to comply) with the employment regulations and tax codes of foreign countries” - and putting policies around this for their employees.
This is the bit I can't get my head around - HOW does Country X pursue a company which is entirely UK based ? Especially bearing in mind that in our case the person is working on IT systems located in the UK, is paying tax/NI in the UK, and is being paid into a UK bank account?Let’s say
1. I am an entirely U.K. based company - I have no legal entity outside the U.K., all my business is done under U.K. law., most of my customers are U.K. based, and what few suppliers I have are also overwhelmingly U.K. based.
2. Country X has some rule in their tax code that says “if an individual conducts work from this country for more than 90 days a year, then they fall under employment regulations of this country for the duration of their time here.”
In this instance - yes the employee may be liable for income tax etc and that’s their problem. But suddenly the employer is liable for whatever employers payroll/social security taxes there are, employment regulations, working visas,…it all gets complicated.
For the employer I can completely say “we do not want to burden ourselves with the costs and hassle of having to comply (or even check whether we need to comply) with the employment regulations and tax codes of foreign countries” - and putting policies around this for their employees.
Countdown said:
brickwall said:
You’re missing my point. I’m not saying it’s impossible - I’m saying that for many companies the risk outweighs the reward.
Let’s say
1. I am an entirely U.K. based company - I have no legal entity outside the U.K., all my business is done under U.K. law., most of my customers are U.K. based, and what few suppliers I have are also overwhelmingly U.K. based.
2. Country X has some rule in their tax code that says “if an individual conducts work from this country for more than 90 days a year, then they fall under employment regulations of this country for the duration of their time here.”
In this instance - yes the employee may be liable for income tax etc and that’s their problem. But suddenly the employer is liable for whatever employers payroll/social security taxes there are, employment regulations, working visas,…it all gets complicated.
For the employer I can completely say “we do not want to burden ourselves with the costs and hassle of having to comply (or even check whether we need to comply) with the employment regulations and tax codes of foreign countries” - and putting policies around this for their employees.
This is the bit I can't get my head around - HOW does Country X pursue a company which is entirely UK based ? Especially bearing in mind that in our case the person is working on IT systems located in the UK, is paying tax/NI in the UK, and is being paid into a UK bank account?Let’s say
1. I am an entirely U.K. based company - I have no legal entity outside the U.K., all my business is done under U.K. law., most of my customers are U.K. based, and what few suppliers I have are also overwhelmingly U.K. based.
2. Country X has some rule in their tax code that says “if an individual conducts work from this country for more than 90 days a year, then they fall under employment regulations of this country for the duration of their time here.”
In this instance - yes the employee may be liable for income tax etc and that’s their problem. But suddenly the employer is liable for whatever employers payroll/social security taxes there are, employment regulations, working visas,…it all gets complicated.
For the employer I can completely say “we do not want to burden ourselves with the costs and hassle of having to comply (or even check whether we need to comply) with the employment regulations and tax codes of foreign countries” - and putting policies around this for their employees.
The bigger worry for the small company is that some charge gets placed against them and a customer uncovers it, or they have to declare it in some due diligence process etc.
For multinationals the point is clearly stronger. Multinational A has to declare how many people it has working in Country X and pay associated taxes etc. This used to be simple because people working in Country X were simply those employed in Country X or those who’d been sent there to work by the company….now it starts to get complicated because it could include a pile of employees from country Y who decided they preferred working from home in Country X and relocated.
brickwall said:
Oh I agree enforcement is unlikely. I guess theoretically country X tax authority could sue or impose sanctions within its jurisdiction. Small UK based company not wanting to break the rules (even if enforcement is unlikely) is also entirely reasonable.
The bigger worry for the small company is that some charge gets placed against them and a customer uncovers it, or they have to declare it in some due diligence process etc.
For multinationals the point is clearly stronger. Multinational A has to declare how many people it has working in Country X and pay associated taxes etc. This used to be simple because people working in Country X were simply those employed in Country X or those who’d been sent there to work by the company….now it starts to get complicated because it could include a pile of employees from country Y who decided they preferred working from home in Country X and relocated.
All of that and also the fact that since Brexit a UK citizens ability to reside / work in the EU has been massively curtailed, they are effectively working as aliens, will potentially have zero benefits that they are not in violation of the terms of and the employer has a liability to make up the tax liability / social welfare payments etc that come with having a remote employee, the work being for UK customers from UK servers is irrelevant.The bigger worry for the small company is that some charge gets placed against them and a customer uncovers it, or they have to declare it in some due diligence process etc.
For multinationals the point is clearly stronger. Multinational A has to declare how many people it has working in Country X and pay associated taxes etc. This used to be simple because people working in Country X were simply those employed in Country X or those who’d been sent there to work by the company….now it starts to get complicated because it could include a pile of employees from country Y who decided they preferred working from home in Country X and relocated.
Put this another way Joe & Pepe Databasios S.p.A has Luigi in the UK, haven't old anyone, he only works for Italian customers via Italian servers but is resident in the UK for a period of time outside of that that is given as 'grace' usually 90 days or so, Joe & Pepe Databasios S.p.A are then liable to HMRC for relevant taxation purposes and to all intents and purposes post Brexit young Luigi us working here illiegally ... thats the crux of of, if they want Luigi here legally they need to register an entity and get Luigi a UK Work Permit as Brexit has f***ed young Luigis ability to build his career in the UK without one.
People can't just choose where they want to live / work .... there are rules, some apply to the individual and others to the employer.
PS - The tongue in cheek Italian references are allowed, I am one ...
dibblecorse said:
Put this another way Joe & Pepe Databasios S.p.A has Luigi in the UK, haven't old anyone, he only works for Italian customers via Italian servers but is resident in the UK for a period of time outside of that that is given as 'grace' usually 90 days or so, Joe & Pepe Databasios S.p.A are then liable to HMRC for relevant taxation purposes and to all intents and purposes post Brexit young Luigi us working here illiegally ... thats the crux of of, if they want Luigi here legally they need to register an entity and get Luigi a UK Work Permit as Brexit has f***ed young Luigis ability to build his career in the UK without one.
People can't just choose where they want to live / work .... there are rules, some apply to the individual and others to the employer.
I'm not being contrarian just for the sake of it - I'm genuinely curious about both the technicalities and practicalities of this.People can't just choose where they want to live / work .... there are rules, some apply to the individual and others to the employer.
from a legal and technical point of view how would HMRC force J&PD SpA to create a legal entity here and then start paying taxes? J&PD don't exist in the UK so I assume they can't be taken to Court in the UK, are HMRC therefore going to prosecute them in Italy under Italian law? I assume that's a Civil case given that Italian laws haven't been breached?
From a practicality point of view how would HMRC even know that Luigi is working for J&PD? There are thousands of car washes, takeaways, taxi drivers, Uber and deliveroo drivers, and sweatshops in Leicester who are openly breaching HMRC rules whom HMRC don't appear to have the time or inclination to prosecute. Don't get me wrong - I don't think this is the basis for letting Luigi work here, I'm just mentioning that the risks of being identified are small.
Countdown said:
dibblecorse said:
Put this another way Joe & Pepe Databasios S.p.A has Luigi in the UK, haven't old anyone, he only works for Italian customers via Italian servers but is resident in the UK for a period of time outside of that that is given as 'grace' usually 90 days or so, Joe & Pepe Databasios S.p.A are then liable to HMRC for relevant taxation purposes and to all intents and purposes post Brexit young Luigi us working here illiegally ... thats the crux of of, if they want Luigi here legally they need to register an entity and get Luigi a UK Work Permit as Brexit has f***ed young Luigis ability to build his career in the UK without one.
People can't just choose where they want to live / work .... there are rules, some apply to the individual and others to the employer.
I'm not being contrarian just for the sake of it - I'm genuinely curious about both the technicalities and practicalities of this.People can't just choose where they want to live / work .... there are rules, some apply to the individual and others to the employer.
from a legal and technical point of view how would HMRC force J&PD SpA to create a legal entity here and then start paying taxes? J&PD don't exist in the UK so I assume they can't be taken to Court in the UK, are HMRC therefore going to prosecute them in Italy under Italian law? I assume that's a Civil case given that Italian laws haven't been breached?
From a practicality point of view how would HMRC even know that Luigi is working for J&PD? There are thousands of car washes, takeaways, taxi drivers, Uber and deliveroo drivers, and sweatshops in Leicester who are openly breaching HMRC rules whom HMRC don't appear to have the time or inclination to prosecute. Don't get me wrong - I don't think this is the basis for letting Luigi work here, I'm just mentioning that the risks of being identified are small.
Upon identification Luigi gets deported, J&PD potentially get sent a bill, more likely they will have it made difficult to trade in the UK, but the risk exists and no sane employer wants that risk just so an employee can enjoy a working lifestyle they are not entitled to, sense of entitlement and rights are two different things, the latter is very black and white.
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