Mobility and the 31 January deadline - Top tips to make life easier

Those of us that support globally mobile employees will be all too familiar with what 31 January means. Globally mobile employees in and out of the UK need to have their tax returns filed and tax payments made by this date. Employers usually sponsor the support of tax professionals as the tax returns of these employees are directly linked to settling liabilities owed by them and can become very complex due to cross border issues. 

Those of us working in Mobility/Expat tax know how busy January is. Many of us put our lives on hold to make sure our clients and contacts avoid interest and penalties for missing the 31 January deadline.

Each year we all target a smooth process but things don’t always go to plan so between employees, HR, Reward, Tax and Finance and tax advisors urgent situations do arise! We’ve all been there, the senior executive who needs to approve their tax return urgently is skiing in the Alps, tax payments due take 10 working days to settle but we only have 5 days and there is always the surprise liability as “something went wrong with payroll.”

Right now is a great time to note down what caused the trouble and pain and avoid them in 2019.

So what learnings do we have at Crowe? What would make life easier for employers and employees this time next year? Here are our top tips:

1. Identify who may need to file returns as soon as possible. HR, finance and tax teams should review which employees may have filing obligations. This is best done at least on a quarterly basis, by reviewing which employees are working across borders or have relocated in or out of the UK. Early identification will facilitate payroll compliance too. Not doing this results in exposure to payroll penalties and/or interest for the employee and the employer. Ideally, globally mobile employees will also need tax briefings and advice before they become mobile so early identification is absolutely key.
2. Ensure compensation reporting is correct. Globally mobile employees are working in at least two locations and at least some element of their compensation, expenses and benefits will be delivered in each country. Multiple and new sources of compensation will exist and there will be more complexity. Understand the different sources of compensation and review early how they need to tie into your payroll reporting process in both countries. Doing this review will mean you reduce exposure to payroll penalties, make the tax return process smoother and avoid surprise liabilities.
3. Put a clear plan in place. The process will involve employees in many different time zones and in-house teams across payroll, finance, HR, tax and pensions to name a few. Build a plan and communicate a timetable so everyone knows what role they need to play in the process. So much time can be lost when none is available finding the person at the last minute to track down outstanding information. Set your employees clear targets for receipt of their information and make sure you actively follow up with them.
4. Clarify and communicate your policy: The policy on who bears income taxes on different portions of compensation should be clear upfront. The assignment letter is an ideal place to make a statement on this. When the tax is due is not the best time to determine and decide policy under time pressure. Emotions may be involved and someone will likely be left with a nasty surprise.

It’s never too soon to learn from this year, to ensure a smoother process, with less anxiety in 2019.

For more information feel free to contract me.

[email protected]

www.croweclarkwhitehill.co.uk/staff/dinesh-jangra/