Many international groups have appointed non-resident individuals to a director role for their UK or Northern Ireland subsidiaries. These individuals typically visit Northern Ireland or the UK to attend board meetings or perform other director duties.
HMRC have identified that the obligation to withhold and report UK payroll taxes may not always be operating as expected, particularly where such individuals are paid overseas for a wider group role that includes the UK director duties. If the company has failed to operate UK employer taxes (income tax and social security) this could generate a significant liability, together with associated late payment interest and a possible penalty for the company, as HMRC can seek recovery of payroll taxes underpaid for the previous six tax years if they consider that the company has not exercised reasonable care.
In this article, Eunan Ferguson, Director in KPMG’S Belfast tax practice, reviews the surprisingly wide scope of UK employer taxes that can apply to remuneration attributable to the services of non-UK resident individuals carrying out duties as directors of companies in Northern Ireland and the UK.