Social Security and employees working temporarily abroad

An individual will generally be subject to social security in the country they are living and working in.

Where a UK-based individual is temporarily working outside of the UK, there may be an agreement that allows them to remain within the UK social security without the need to pay social security in the host country.

The UK has social security agreements with the EU and over 20 other countries around the world. Under these agreements, the employee can normally remain in the UK social security scheme for between two and five years, during which nothing is payable in the host country. To prove to the host country authorities that the individual continues to pay UK social security, the UK tax authorities will issue either an A1 certificate (EU) or a Certificate of Coverage (CoC – non-EU).

HMRC commissioned a report by Kantar Public UK in the second half of 2021 to look at the practical issues arising in respect of the A1/CoC application process. They conducted 50 in-depth interviews with recent applicants across three specific groups (self-employed, employers and agents).

The final report was issued in February 2023 and the key takeaways from the report are detailed below.

• Awareness of the A1/CoC process and why the documents are needed varies greatly from self-employed individuals through to employers and agents with varying application volumes. High-volume agents were the most aware of the processes, while the self-employed were least aware.
• Interpretation of when a certificate should be applied for varied between the three groups and the sector involved. A1/CoCs were more likely to be applied for to complete short construction site projects (where they were needed for site access) or the performing arts than for professional services where they are generally only used for longer trips. In many cases, employers confirmed there are ‘cost versus compliance’ considerations factoring into whether an application is made.
• There is confusion in some quarters around the different application forms including the distinction between posted workers and multi-state employees, and the correct form needed to obtain a S1 certificate (for healthcare in EU/Switzerland).
• There is frustration once the application has been made with forms going missing in the system, inconsistent caseworker responses and certificates being issued with errors on them.

The research with the respondents looked at potential changes to the application process and focused on the following:

• digital certificates (subject to the other country accepting them);
• a detailed status tracker, which would cut down on calls to HMRC;
• the use of a single intelligent application form was met with mixed feelings but could be useful for those less experienced in the application process;
• ‘auto-fill’ forms would be useful subject to security concerns; and
• a change of circumstances form was seen as less necessary, although some would use it if there was one available (especially for extensions).

HMRC has started to take on some of the report’s findings and has now issued a more intelligent CA3822 form (used for posted workers). The form is designed to streamline the application process and the long-term intention is for the whole process to become far quicker.

Given that cross-border travel is returning to normal and more individuals are working for short periods in the EU and other reciprocal agreement countries (often at short notice), it is good to see that HMRC are looking to improve the application system.

If you have any questions or concerns about NIC / social security and your globally mobile employees, please contact Jo Webber or Ian Jones, who can help you to review the position.