46 taxation
Growing global: navigating the compliance minefield in the UK and overseas
As businesses across the UK continues to ‘grow global’, Grant Thornton’s specialist global mobility services division has seen a meteoric rise in companies looking for advice. In the past two years Grant Thornton’s team in the Thames Valley has expanded 12-fold and is now thought of as the vital ‘right hand’ to SMEs, mid-sized businesses and global corporations that are sending employees overseas or recruiting internationally
The Business Magazine spoke to Gavin Blackman (pictured), who heads up the team in the Thames Valley, to find out what issues businesses face when it comes to global employee movement.
“Over the past seven to eight years, even in the downturn, there has been a marked increase in the number of businesses both employing people from overseas and sending their staff on international assignments. Skills shortages, talent succession planning and an expectation from young career starters that they will have the opportunity to work abroad at some point have all contributed to greater cross-border movement.
“For many businesses, even the biggest multinationals, it can be a daunting task to arrange for an employee to be seconded to a foreign country for a number of months or years. It’s an incredibly complex web of corporate and individual obligations, with tax returns, immigration, accommodation, schooling and a wealth of other factors involved.
“That’s where our team comes in to advise and put simple processes in place that ensure that both the company and the individual are compliant.
“The biggest mistake companies make in global mobility is a lack of alignment with their business strategy which results in an ad-hoc approach to international deployments. The responsibility for organising moves often falls between different functions of the business, for example HR, tax and finance, and for a company that does not have a dedicated global mobility services team, this itself can present issues. A lack of alignment and a spread of responsibility can result in actions falling between teams or even costly doubling up of efforts.
“Common misconceptions that we encounter are that because an employee is on a UK payroll and paying UK tax, they don’t need to pay tax or file a tax return in the country they are
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Blackman’s top tips for getting cost- effective on global mobility
Align international assignments to business goals
Before sending any employees on international assignments, you must understand how this fits with your company’s ambitions and strategy – and the financial implications of these goals. You can then align the employee’s terms and conditions, remuneration package and assignment duration to your strategy.
Understand the costs
Cost control is cited as the top mobility challenge in terms of future impact on organisations, so don’t be caught out. You should consider costs that cover tax and social security but also the cost of supporting the assignment – for example, relocation costs, immigration costs and professional fees.
Address the tax implications
As an FD, tax will no doubt be a consideration when sending employees to different parts of the world. Each region will have its own regulatory bodies and tax obligations, and understanding these upfront is important.
Communicate to keep down costs
seconded to. That is completely wrong and as more and more emerging market countries are tightening up their tax systems, it is becoming an increasing risk for UK businesses.
“Another mistake we often encounter is businesses paying more than they should in tax and/or social security contributions than they should do by ‘doubling up’ in both countries. Over the years we have helped businesses and employees reclaim tens of thousands of pounds that they have paid out unnecessarily.
“While some may think that global mobility is an area filled with risk and danger, it actually presents a huge opportunity for forward-thinking businesses. In the current war for talent, companies with established global mobility programmes and a well-oiled approach are far more likely to attract skilled and ambitious employees that can help them grow their business both here and overseas.”
Details: Gavin Blackman 07786-703648
gavin.r.blackman@uk.gt.com
THE BUSINESS MAGAZINE – THAMES VALLEY – NOVEMBER 2015
Communication is key. You will need to make sure the policy is communicated to all relevant stakeholders who will be responsible for transferring and managing employees. This will avoid inconsistencies and a lack of control, which may result in higher employment costs, including tax, social security, penalties, interest and some disgruntled international assignees.
Provide support for international assignees
Adequate support for international assignees is vital, before, during and after their project. This ensures they concentrate on the job in hand, rather than worrying about their tax position, revenue authorities and compliance paperwork.
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