Professional services are an essential part of the construction sector. Without our architects, engineers, and other consultants holding professional qualifications, the industry would quickly grind to a halt. And yet, while the Trade and Co-operation Agreement ("TCA") provides a degree of clarity in relation to the future trading relationship between the UK and the EU, uncertainties remain regarding the terms on which professionals from the EU can work in the UK and vice versa.
In this article we look at employment and tax matters to consider when seeking to work with EU professionals on UK projects.
Employment options
The potential skills shortage has long been of concern, and, with the end of free movement of individuals between the UK and the EU, the sector will now need to take into account new immigration rules when engaging EEA nationals (excluding Irish nationals).
There are various options available and much will depend on the nature of the work and how long such professionals plan to spend in the UK. The position can be complex and each case will need to be considered individually but the following options may be available:
Settled/pre-settled status: EEA nationals already living in the UK at the end of 2020 may be eligible to apply for either "settled" or "pre-settled" status, entitling them to carry on living and working in the UK. Applications for settled or pre-settled status may be made up until 30 June 2021. Family members of those with settled or pre-settled status may also be able to make use of this scheme to live and work in the UK going forward.
Frontier worker permit: this route may be helpful for regular "commuters" to the UK. An EEA national who remains resident in their home state and who started to work in the UK before 31 December 2020 may continue to do so, provided they meet the eligibility criteria (including returning to their home country at least once every 6 months or twice in a 12 month period). Applications for a Frontier Worker permit must be made by 30 June 2021.
Visitor route: non-UK nationals may visit the UK for up to six months at a time but are only allowed to carry out limited activities. These include, for example, business meetings, site inspections and the installation or repair of equipment by an employee of a foreign manufacturer. Activities which involve more substantive work are not permitted and there are also strict rules preventing payment being made for activities carried out whilst visiting the UK (with limited exceptions, such as travel expenses).
Sponsorship: a UK employer may apply for a sponsor licence enabling them to employ an EEA national in the UK under one of a number of specified routes, including:
- the skilled worker route - the individual must meet certain requirements including as to salary, English language and skills level;
- the intra-company transfer route - the individual would need to be working in a linked overseas business as well as meeting salary and skills requirements; and
- the temporary worker route - this route is very narrow in its application and is unlikely to cover construction professionals.
Note that there is no immigration route open generally to self-employed EEA nationals wishing to work in the UK on a temporary assignment. Self-employed EEA nationals may come to the UK under the "Global Talent" visa but only where they are endorsed by a relevant body as being exceptionally talented or exceptionally promising in certain fields.
Professional qualifications
Until 1 January 2021, the Mutual Recognition of Professional Qualifications Directive ("MRPQ Directive") applied. The MRPQ Directive set out the framework for recognising professional qualifications with the aim of enabling individuals to work across other Member States. It was one of the main tools to facilitate the free movement of professionals across the EU.
The MRPQ Directive no longer applies and there is no immediate replacement. This means that there is no automatic recognition of professional qualifications achieved outside the UK. While, the intention of the UK is to agree mutual recognition arrangements, currently these remain outstanding.
The situation for architects with EEA or Swiss qualifications is clearer as architects who are already registered with the Architects Registration Board continue to be recognised. However, those who were not registered on 1 January 2021 will need to make an application under the third country route to recognition which includes undergoing exams.
In practice, and until further arrangements are agreed between the UK and the EU, it would be prudent when considering engaging EU professionals to pay particular attention to ensuring that professional indemnity insurance cover is not compromised and that they have the requisite experience to undertake the project at the required standard.
Tax considerations
Leaving the EU has not affected the direct tax treatment of a professional's earnings from its supply of services. As before, this will depend upon the residence status of the individual and any applicable double tax treaties. Similarly, although the EU rules on social security contributions for cross-border and mobile workers no longer apply to the UK, these have been largely replicated in the TCA such that these contributions will normally be payable where work is undertaken except in certain situations when the individual is only temporarily in that jurisdiction (broadly, for less than two years).
In terms of accounting for VAT on professional services, the situation should be unchanged. EU professionals providing their services to construction businesses in relation to UK land and property will be making a supply in the UK for VAT purposes. As before Brexit, the cross-border reverse charge should normally apply so that the professional need not charge (or be registered for) UK VAT.
Closing comment
The tax position is largely unchanged and there are engagement options available in order to continue to recruit from a pool of global talent. Hopefully, procedural challenges will ease as we become more familiar with the options. The uncertainty around the issue of mutual recognition of qualifications is frustrating and needs to be resolved to help ensure that obstacles to a post-pandemic construction sector that is innovative, profitable and sustainable are minimised as soon as possible.
