HMRC's new Guidelines for Compliance -- GfC13 -- serves as a crucial reminder for international employers, and their internationally mobile employees (IMEs) of the standards expected when submitting documents to HMRC, including for payroll, benefit in kind (BIK), short-term business visitors (STBVs), voluntary disclosure, and income tax return purposes.
The guidance, issued on 1 September 2025 and taking immediate effect, covers all taxes and applies to all nature of UK taxpayers. In a complex tax environment, this guidance emphasises the importance of legal interpretation, proportionality, and accurate disclosure, and increases the risk exposure to business and IMEs that fail to obtain and act upon appropriate professional guidance.
The core message of GfC13 is straightforward: taxpayers, businesses and individuals alike must ensure that their tax submissions are correct and complete to the best of their knowledge. This "best efforts" standard requires a thoughtful, evidence-based approach to both factual accuracy and legal interpretation.
HMRC stresses that businesses and individuals should adopt the interpretation of law most likely to be correct, not just the one that offers the most favourable outcome for them. This is particularly relevant in the global mobility area, where legal ambiguity, employee intentions and commercial considerations often intersect, and where technical positions can impact the employer and IME tax situation.
While professional advice is crucial, GfC13 makes it clear that advice is not a shield if the business or individual has not disclosed the full circumstances to the adviser.
GfC13 introduces a proportionality test whereby the level of care should reflect the complexity and potential tax impact of an issue. Taking a technical position that is not reasonably believed to be correct will almost certainly result in penalties when challenged by HMRC. For example, failing to report through payroll the income for UK duties of non-resident directors (NRDs) or not adhering to HMRC’s recent guidance on the year-end reporting of employment-related securities (ERS) received by STBVs eligible for UK tax exemption are situations where penalties are likely to apply. For prior coverage of NRDs, see Non-resident directors, what are the UK PAYE income tax and NIC risks? - BDO). With HMRC’s scope to apply higher penalties relating to “offshore matters,” where payments are received outside the UK, the risks to international businesses and their IMEs are magnified.
The BDO team will be able to help with the following:
Andrew Kelly
BDO in United Kingdom
The guidance, issued on 1 September 2025 and taking immediate effect, covers all taxes and applies to all nature of UK taxpayers. In a complex tax environment, this guidance emphasises the importance of legal interpretation, proportionality, and accurate disclosure, and increases the risk exposure to business and IMEs that fail to obtain and act upon appropriate professional guidance.
Purpose of Guidance – Correct and Complete Submissions
The core message of GfC13 is straightforward: taxpayers, businesses and individuals alike must ensure that their tax submissions are correct and complete to the best of their knowledge. This "best efforts" standard requires a thoughtful, evidence-based approach to both factual accuracy and legal interpretation.HMRC stresses that businesses and individuals should adopt the interpretation of law most likely to be correct, not just the one that offers the most favourable outcome for them. This is particularly relevant in the global mobility area, where legal ambiguity, employee intentions and commercial considerations often intersect, and where technical positions can impact the employer and IME tax situation.
While professional advice is crucial, GfC13 makes it clear that advice is not a shield if the business or individual has not disclosed the full circumstances to the adviser.
Penalty Exposure
GfC13 introduces a proportionality test whereby the level of care should reflect the complexity and potential tax impact of an issue. Taking a technical position that is not reasonably believed to be correct will almost certainly result in penalties when challenged by HMRC. For example, failing to report through payroll the income for UK duties of non-resident directors (NRDs) or not adhering to HMRC’s recent guidance on the year-end reporting of employment-related securities (ERS) received by STBVs eligible for UK tax exemption are situations where penalties are likely to apply. For prior coverage of NRDs, see Non-resident directors, what are the UK PAYE income tax and NIC risks? - BDO). With HMRC’s scope to apply higher penalties relating to “offshore matters,” where payments are received outside the UK, the risks to international businesses and their IMEs are magnified.
How Can BDO Help?
The BDO team will be able to help with the following:
- A review of your internal processes to ensure they are suitably robust to capture comprehensive and correct data relating to IMEs earnings, benefits, relocation costs, share awards, and visits to the UK.
- An international employer health check of the tax reporting positions adopted in relation to your IMEs and pay-as-you-earn (PAYE), employment-related securities (ERS), NRDs, STBVs and BIK to confirm that you are accessing eligible tax reliefs but not breaching compliance.
- Training for your stakeholders on key tax and NIC reporting areas in relation to IMEs and common pitfalls resulting in risk exposure.
- Supporting your business in connection with an HMRC Employer Compliance Review/Business Risk Review relating to your IMEs.
Andrew Kelly
BDO in United Kingdom