The CV-19 pandemic saw the greatest shift in how and where people across the globe choose to work. The impact on both companies domestic and international workforce was dramatic at the time and although some working patterns have returned to their pre-pandemic norms, many workers and companies have not.
Remote and/or flexible working became the norm and this hybrid way of working is largely accepted, even expected, post pandemic – employers competing for talent have to offer it in many cases if they want to fill vacant roles.
Most governments tried to accommodate this approach to support businesses through the pandemic although most of the interim measures introduced have now been rolled back – particularly in the UK.
Nevertheless, in the UK, the Government’s Office of Tax Simplification (OTS) has recognised that the new realities for employers create a multitude of considerations for governments, tax authorities, employers and individuals. It has launched a review of hybrid and distance working with a call for evidence to help it assess if the UK tax rules are still fit for purpose and where they could be simplified.
There are many facets to the new issues facing employers with tax/social security and associated considerations being one of the key issues. There is also recognition from the OTS that working across international borders creates added complexities.
Need to know
The core of the OTS call for evidence focuses on how businesses are operating now, both for international workers and with purely UK based workforce and how this has changed since the start of the pandemic. It also asks for feedback on internal policy and procedure changes that companies have made to cope with the new world of hybrid working; if there are obvious policy trends, these may highlight the need for specific simplifications.
Another key area of interest for the OTS is the extent to which employers with workers based overseas have had to consider/reconsider their corporate permanent establishment position for the jurisdictions involved. The OTS will be interested in how many employers have had to assess the potential corporate tax risks of employees working from an overseas home.
Interestingly, the OTS is seeking to engage not just with employers but a wide variety of people – also including employees and the self-employed who work cross border; these latter two groups can give feedback directly through an online survey here.
Reform in the future?
An OTS review is always a preliminary process that may spark the Government to take forward reforms – so this will be an ongoing process and it may take a number of years before any changes are legislated. However, we believe that this type of review is likely to be replicated across multiple countries in the coming years and it seems certain that employers will have many updated rules and regulations to track and comply with for their cross-border workers.