With the end of the tax year 5 April 2020 approaching, we wanted to take the opportunity to remind you about UK payroll compliance requirements in respect of globally mobile employees.
UK companies with any form of globally mobile workforce (into or out of the UK) should be checking that they are fully compliant in terms of PAYE and NIC (social security) operation. The tax year end, i.e. month 12, is a good opportunity to review your globally mobile workforce to ensure you have taken the necessary steps to capture all data and take appropriate action in terms of operating PAYE and NIC.
Broadly, UK employees should have PAYE and NIC operated on 100% of their world-wide employment income unless you have agreed with HMRC to operate it on a reduced basis. Similarly for non-UK employees working in the UK, all compensation regardless for where paid needs to be reported for PAYE and NICs.
Applicable to both inbounds and outbounds is PAYE and NIC operation on 100% of world-wide employment income meaning exactly that, examples of employment income that is often missed from UK payrolls:
There is also associated expenses and benefits reporting to consider.
The topic of PAYE and NIC non-compliance in respect of a globally mobile workforce is high on every HRMC PAYE/NIC audit agenda. Non-compliance will mean the employer is exposed to interest and penalties on unpaid PAYE/NIC and these penalties can be up to 100% of the unpaid PAYE/NIC. In terms of next steps, employers should ask themselves the following questions:
Have you taken steps to confirm that world-wide employment income has been captured and put through the UK payroll?
Our Global Mobility Services team can help employers to understand their obligations regarding PAYE and NIC, provide assistance in reviewing existing HMRC agreements and provide assistance in making applications to HMRC for agreements to reduce PAYE operation.
Whilst we are considering UK PAYE and NIC compliance here and now, it is possible that there will be a simultaneous payroll withholding obligation in the other country where the employee is working, or where they are from. The timeline is likely to be different in terms of year end but if you would like more information in this respect please let us know.
If you would like to have a conversation to discuss this further, please do not hesitate to contact Amanda Chandler or your usual Crowe contact.