UK Hiring employees for overseas Representative Office

Oct 8, 2018
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United Kingdom

I have a couple of questions regarding hiring staff to work overseas for a UK company's Representative Office i.e. a non revenue generating office established overseas solely for the purposes of gathering information or finding suppliers etc. in that region.

Firstly, does anyone know if UK non tax resident employees (regardless of nationally) hired locally to work in that territory, for that Rep Office, need to be registered as employees of the UK head office and/or registered for PAYE (Pay as You Earn) in the UK? In the region in question (Taiwan), the local laws present no requirement that employees hired to work for a Rep Office must be dispatched from the company's head office. Also, as the employees are non UK tax residents that are hired directly to work for the overseas office and are not seconded from the head office, they would have no UK Tax or NI liabilities. In this case would UK PAYE registration still be required for them?

Secondly, the region in question also has no restrictions on how salary should be paid to Rep office employees, meaning, from their point of view, the following 3 options are all possible:

1) UK parent company sends money to the Rep Office annually or monthly to cover employees' salary, office rental etc. expenses. Salaries are then charged and paid through that local office.

2) UK parent company directly pays Rep Office employees into employee bank accounts set up in the UK. The only current employee of the Rep Office is a non UK tax resident British citizen that would prefer this.

3) UK parent company directly pays Rep Office employees into employee bank accounts set up in the other region. This would work better for future employees that are nationals of that region.

Option 1 is, as far as I know, the norm when it comes to remitting expenses to a Rep Office. However, If the company goes with options 2 or 3, from the point of view of HMRC (UK Tax Office), doesn't paying the employees directly from the head office make them employees of the head office for PAYE purposes? Or is there another way to classify these expenses when reporting the company financials?

Thanks for your help.

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