UPDATE: The OTS has published its report following a review of hybrid and distance working. Read more here.

The OTS has launched a review looking for evidence of trends in relation to increasing numbers of people choosing to work in different ways, including across borders.

The review will also consider whether the tax and social security rules are flexible enough to cope, and what businesses, advisors and other bodies are experiencing as new ways of working become business as usual.

Context for the review

• You don’t need to look far for evidence of the seismic change in working from home in the UK. People have come to expect more flexible working conditions, and businesses recognise that to retain and attract talent they need to offer that flexibility
• With the drive to adapt to the changing market, and a breadth of regulations to consider, tax isn’t always the first thing on people’s minds when designing their policies
• Over forty jurisdictions already offer ‘digital nomad’ visas to attract mobile workers, many of them aimed at a tax-free stay for the visitor
• Even in the UK, rules and guidance around employee expenses, and concepts like permanent workplace, seem designed for traditional ways of working and may begin to feel stretched

Who OTS would like to talk to

Interested parties can contact OTS for a meeting, or to send theirwritten response, at ots@ots.gov.uk.

The OTS is keen to engage with a wide variety of people to find out what is really happening in the market, and how businesses and advisors are adapting or planning to adapt.

OTS particularly want to speak to:

• Employers and employees across a range of sectors and sizes, and
• Self-employed people who may spend part of their time working in another country

Some of the key issues the review will cover

• Working across international borders, and what that means for things like tax, social security, tax residence, and permanent establishment
• How accommodation, travel, and other expenses work in a hybrid world, including who will pay and whether permanent workplace rules make sense
• Application of short term business visitor rules, overseas workday relief, and modified payroll
• The treatment and impact on pension contributions and share schemes
• The risks or otherwise of creating permanent establishments or even changing corporate residence

Further guidance for the review

In carrying out this work, the OTS will be mindful of:

• the likely implications of recommendations on the Exchequer, the tax gap and compliance with the tax system generally
• the role and contribution of taxation advisers
• the implications of these changes in different sectors of the economy and different regions or nations within the UK
• examples of international experience or best practice and the work of the OECD in this area
• visas/rights to work and employment law

Background

• The Office of Tax Simplification (OTS) is the independent advisor to the government on simplifying the UK tax system.  The OTS undertakes formal reviews commissioned by the Chancellor, and own initiative reviews covering many of the issues facing the UK tax system. This is an own initiative review by the OTS
• On 27 July the OTS published a Scoping Note outlining their intention to look at hybrid and remote working
• OTS will publish a report of our findings in early 2023