Deadline for responses to hybrid / distance working review brought forward

14 October 2022. Published by Ben Roberts, Partner and Kelly Thomson, Partner, ESG strategy lead and Patrick Brodie, Partner

At the height of summer 2022 the (soon to be disbanded) Office of Tax Simplification (OTS) announced a review (the Review) into the emerging trends, and tax implications, of hybrid and distance working.

As part of last month's so-called 'mini-Budget' it was announced that the OTS is being shut down. One effect of this is that the deadline for responses to this Review has been brought forward to 28 October 2022 (originally 25 November). The wider fallout from the mini-Budget may have resulted in this shortened timetable going unnoticed.

The Review

The catalyst for the Review, of course, was the Covid-19 pandemic. Many (if not all) businesses have found that their post-pandemic working practices have changed to varying degrees. Some businesses have given up their (pre-pandemic) fixed office locations. Conversely, for some sectors, where a worker's actual presence cannot be decoupled from the performance of their work, working arrangements may continue unchanged. Otherwise, organisations have settled into more flexible, or 'hybrid' practices.

For the purposes of the Review:

  • Hybrid working means that employees must (under the terms of their engagement) spend some of their contracted time at their employer's workplace, but there is flexibility as to the remainder of their contracted hours
  • Distance / home working means that either there is no requirement to work from the employer's workplace or there is no such workplace available. In other words the employee is free to choose where, physically, they can perform their duties (typically, from home)

The Review is intended to be a high-level review of current working practices and in particular will consider (1) whether present trends in this area have resulted in more cross-border working, and (2) whether these trends are causing difficulties for employers and employees in terms of the current tax rules in this area.

The Review includes a number of suggested questions to which respondents are invited to answer. Very broadly these questions fall into two distinct categories in keeping with the scope of the Review. 

A first set of questions focuses on businesses that have seen a rise in the number of employees working outside of the business's 'home' jurisdiction (whether that means employees of UK businesses now working outside of the UK or employees now working in the UK for overseas businesses). This set of questions is framed both from an employment tax (payroll and social security) perspective as well as from a corporate income tax perspective (in particular the potential risk of such working practices giving rise to a 'permanent establishment' of the employer business outside of its 'home' jurisdiction).

The second set of questions looks at purely domestic (UK) tax issues and the potential challenges now faced by businesses in terms of correctly applying the tax rules around employee expenses / allowances where hybrid or distance working practices are adopted. A specific question asks for examples of difficulties encountered under the existing "permanent" (as opposed to "temporary") workplace tax rules, where hybrid working is in place.


Review responses are requested by email by no later than Friday 28 October 2022. Our team of experts would be happy to help you frame any responses you may wish to make. We would equally be delighted to talk to you about any concerns you might have in this difficult area.

The OTS's 'call for evidence', including details as to how to respond to the Review, can be viewed here.

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