In previous blogs looking at social security for globally mobile employees, we have discussed when UK National Insurance is due (view our blog on this topic here) and the rules for multi-state workers (view our blog on this topic here). In these, we covered the rules to determine where contributions are due and highlighted that a certificate may need to be obtained to provide to the authorities of other relevant countries to satisfy them that contributions are not due to them because they are being paid elsewhere in accordance with the rules. This blog will explain how certificates can be obtained and key issues around certificates to consider through a series of questions and answers.
- Who do you apply to for a certificate?
- The application for a certificate needs to be made to the authorities of the country where contributions will be paid. When applying for a certificate to remain in the UK National Insurance system, the relevant HMRC office to apply to is the National Insurance Contributions and Employers Office.
- What is the difference between an A1, E101 and Certificate of Continuing Liability?
- An A1 is issued where the employee is an EEA national working within the EEA. An E101 is issued where the employee is a non-EEA national legally resident and employed in an EEA member state. Finally, a Certificate of Continuing Liability is the type of certificate issued where an employee is posted to a country outside the EEA but with which the UK has a social security agreement.
- What forms are required to apply for a certificate?
- When applying for a certificate in the UK, an individual application is required for each employee. The form to use will depend on whether the employee is working in one country within the EEA, in more than one country within the EEA (a so-called multi-state worker) or in a country outside the EEA that has an agreement with the UK.
If it is the first time that an employer is sending employees overseas, they will also need to complete an employer application. There are a number of conditions to be met in order for an employer to “qualify” which should be considered carefully and the form must be completed accurately.
- How long does it take an application to be processed and a certificate issued?
- It can take some time, often 3-4 months, for an application to be processed and a certificate issued. This is why it is best to apply as soon as it is known that the employee will be going overseas. That being said, there should not be any consequences for making a retrospective application, so long as the employee qualifies, a certificate should be issued and the start date backdated. Usually the certificate will simply be posted out once the application is processed. However, if HMRC have any questions about the application, they will get in touch but this will likely delay the process so it is important that all relevant details are included in the application. If HMRC believe that UK legislation does not apply and contributions are due elsewhere, they will write to whoever made the application to notify them.
- What period will the certificate cover?
- Usually an application can be made for any period of up to 5 years and the coverage does not have to be for a specific tax year or length. A certificate should cover the employee from the date they are posted overseas to the expected end of the posting. A further certificate extending the period of coverage may be obtained at a later date if the posting continues for longer than expected. It is important that employers track certificates and their end dates to ensure that if a further certificate is required, this is applied for in good time. Coverage can be extended beyond 5 years in some cases.
One point to note is that if an application is made for a period of more than 24 months or an extension is applied for which takes the total period beyond 24 months, there are increased conditions which must be satisfied and a signed statement from the employee is required to confirm that they wish to remain insured in the UK. Given this, the application process to obtain a certificate for a period of more than 24 months can take longer.
- What if the position changes?
- If the employee goes to work in a different country, a new application is required.
If you have any questions with regard to social security coverage or you require any assistance with obtaining and tracking certificates of coverage, please contact Charlotte Stewart (firstname.lastname@example.org) or your usual AAB contact.