The Office of Tax Simplification report on hybrid and distance working
Peter Abbott · February 8th 2023 · read
The results are in! The Office of Tax Simplification (OTS) has published its findings on tax complexities driven by hybrid and distance working by employees.
One of the final acts of the Office for Tax Simplification - before it was recently disbanded - was to publish their findings following a consultation with businesses and individuals on how UK hybrid working, and overseas distance / remote working, has impacted them.
Their findings were published on 20 December 2022 and can be found here: OTS report on hybrid and distance working - GOV.UK (www.gov.uk)
The OTS considered the huge increase in distance working over recent years, especially due to Covid, and the various responses adopted by employees and employers. The consultation sought to identify common trends that would allow the OTS to make recommendations to the government to simplify the tax system around distance / remote working. Whilst the OTS itself is now disbanded, and so could not make their recommendations, the findings from the report still makes for interesting reading.
In summary, it is estimated that just under half (40%) of the UK workforce can work from their homes (and regularly do split their working time between their home and their ‘usual’ place of work) and, importantly, these, or similar, arrangements are already seen to be the new normal.
Indeed, the expectation now is that employers must offer a remote working option to retain staff and attract new talent and this is seen as a crucial policy for any business to offer.
However, helpful, practical guidance from the government is felt to be lacking, especially in respect of cross border remote working arrangements, where the additional considerations in respect of payroll compliance for income tax and social security and the complications surrounding the creation of a Permanent Establishment are particularly difficult to understand.
In general, there is a desire for the government to take a leading role in addressing these complex compliance matters.
Next steps and cross-border compliance for employers
At MHA, we too look forward to seeing an improvement in the government’s guidance and their response times in respect of such matters, to help both employees and employers fulfil their cross-border compliance obligations, however, as this is likely to take some time, it will leave many with questions that remain unanswered and that may have a detrimental impact to business as normal.
Get in touch
In response, we at MHA are well placed to help you navigate these complex issues and find a resolution that works for you and your business. The MHA Human Capital Advisory team can help you find a bespoke solution that works for you and get in touch today by using our online enquiry form