The Offshore Tax division of SKP has been working for the past seven years, in the field of Payroll Management & Processing Services for UK Companies with an India presence. Mr Prakash Hamirwasia, who heads SKP’s Offshore Tax division, in an interview gives us the lowdown on UK Payroll Management.

• Can you tell us briefly, what does UK payroll involve?
  
  There are two facets to UK payroll‐ One, you may hire local people directly in the UK for carrying out your UK operations, in which case the UK payroll tax calculations and the other payroll compliances for the employer are relatively simple.
  
  And/or, you may send your Indian employees on deputation to UK for onsite projects assignments for a fixed tenure. In this case, the UK payroll compliances including the tax calculations are different and involve various factors from efficient salary structuring to strict administration of all the UK compliances by the employer. Moreover, the employer is also required to comply with the Indian tax laws related to the employment.
  
  We help companies with all the compliance requirements including the payroll calculations for local employees as well as for deputed employees in the UK.
  
  
• Why is there an emphasis on salary structure for deputed employees ?
  
  In case of deputed employees, the employer has to comply with the tax laws of India as well as UK, which often leads to double taxation in the hands of the employee. At SKP, we leverage our understanding of the India UK tax environment and our hands on experience of handling the payroll of a UK organisation to help companies design the salary structure for the deputed employees. This reduces the overall exposure of tax in the hands of the employee as well as the company.
  
  
• Can you specify some of the unique aspects of tax processing that could benefit UK Companies having expat employees?
  
  The employees who are deputed to work on specific assignments, for a limited duration, are generally paid allowances in the UK to meet their day to day travelling and subsistence expenses (like accommodation, food, etc.). These expenses are necessarily incurred by the employees for performing their employment duties. However, the employer has to deduct UK taxes on the allowances paid in the UK. Under certain circumstances, the company can claim exemption on the amount of allowance for which valid supporting/vouchers of the actual travel/subsistence expenses are submitted. HMRC may allow such exemption for the expatriate employees (on an application made to it) by either defining a fixed scale rate of exemption or on the basis of actual supporting.
  
  SKP helps companies in implementing the process of claiming exemption of travel/ subsistence expenses in accordance with the HMRC compliance requirement, including collecting the supportings/ vouchers from the employees and calculating the exemption amount.
  
  
• Does payroll processing involve liaising with HMRC from time to time for various form submissions and resolving queries?
  
  Payroll processing in UK also includes various administrative compliances defined by HMRC which involves online/ hard copy submission of forms (like P46, P85, P45, etc.) and providing information to HMRC from time to time.
  
  As part of the payroll process SKP acts on behalf of clients and deals with HMRC directly to do all the required submissions, whether online or hard copy, and provide information to HMRC.
  
  
• Are deputed employees also required to file their individual tax returns in the UK?
  
  It most cases it is mandatory for the Nondomiciled and/or Non‐resident individuals in the UK to file their tax returns in the UK. HMRC has introduced new Residence and Remittance basis rules which require all the Non domiciled employees to include their worldwide income in the UK tax return on the arising basis or the remittance basis. It is important to identify and analyse all non UK income of the employees for the purpose of inclusion in the UK tax returns.
  
  SKP provides this add‐on service where it prepares the UK tax returns of the deputed employees, collecting information from the employees, analysing the Indian income as per the new remittance rules, preparing the tax computation, compiling the tax return and submitting it to HMRC.

About SKP

SKP is a full‐fledged professional services group in India, providing a wide range of services‐ crossborder business set‐up, corporate services, international tax and transfer pricing, assurance and risk management, and outsourcing services.

As part of outsourcing services we have 7 years of experience in handling UK tax returns and 5 years of experience in payroll processing involving expatriate tax expertise of a 2,000+ people organisation in the UK. The payroll services are being provided out of our Pune Office with backup advice by our UK associate firm of accountants, wherever required. This provides clients a contact in India with UK expertise delivered locally. Our Quality Management System and Information Security Management Systems are ISO certified. We can provide end to end UK payroll services with complete assurance of compliance.