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Common errors, record keeping and HMRC compliance checks (part 4)

Published 13 August 2026

© Crown copyright 2026

This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gov.uk.

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This publication is available at https://www.gov.uk/government/publications/help-with-short-term-business-visitors-gfc19/common-errors-record-keeping-and-hmrc-compliance-checks-part-4

Common errors

Employer errors in respect of short-term business visitors can lead to an underpayment of Income Tax and National Insurance contributions. Any taxes paid late will be subject to an interest charge and HMRC may also impose penalties.

Some of the most common errors that we see are: 

  • having insufficient systems and processes in place to track overseas employees

  • not retaining sufficient records to support any decision made

  • an employer assuming they do not have to operate UK PAYE to deduct Income Tax from an employee’s UK earnings because they are a short-term business visitor

  • not checking that a double taxation treaty exists between the UK and the country the employee is resident in or not reading the relevant double taxation treaty and checking that:
    • it is the version that applies to the relevant period of employment
    • the employee has met the specific treaty conditions

  • not counting all UK days for double taxation treaty purposes

  • not recognising recharges between entities and establishing who ultimately bears the cost of the employee’s remuneration

  • incorrectly treating overseas branches as separate entities

  • misunderstanding the 60-day rule

  • submitting EP appendix 4 returns late or providing insufficient information on the EP appendix 4 returns

  • incorrectly including non‑resident directors in an EP appendix 4 or appendix 8 arrangement

  • assuming that there are no National Insurance contributions obligations or that the National Insurance contributions position is the same as the Income Tax position

This is not an exhaustive list, and it does not cover every error that can occur.

Record keeping

You must keep PAYE records for at least 3 years from the end of the tax year they relate to. This includes details of payments to employees, the deductions you make and records of reports and payments you make to HMRC.

For short-term business visitors, this may include:

  • a contract of employment
  • documents or correspondence setting out UK duties and remuneration
  • record of days spent in the UK (including which of these are workdays) with supporting travel documentation
  • details of any expenses incurred
  • details of any bonuses, regardless of where paid
  • details of participation in share schemes including one-off awards of shares
  • details of any other benefits provided, such as a company car
  • documents to support any decision that National Insurance contributions are not due

This list is not exhaustive. What HMRC deems sufficient will depend on your specific facts and circumstances.

You can read further information on record keeping in:

HMRC compliance checks

HMRC may conduct a compliance check on any employer to ensure PAYE is being operated correctly. It is likely that HMRC would ask further questions if there:

  • are poor systems for monitoring short-term business visitors
  • is a lack of records being maintained
  • is evidence that the double taxation treaty conditions were not met, but PAYE was not being operated

Read more information in HMRC’s factsheet on compliance checks.

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