Why Decentralised Management of International Assignments Creates Hidden Risks

Introduction

Many multinational organisations assume that local teams can manage international assignments autonomously, and that HQ oversight is only needed for complex moves. While decentralisation offers agility, it can obscure material compliance and operational risks.

Heads of Tax, CFOs, and HR leaders should understand where these gaps appear — because the consequences can include audit exposure, unexpected payroll corrections, and reputational damage.

1. Common Assumptions Employers Make About International Assignments

• Local managers know the rules and will escalate exceptions.
• Short-term or low-value moves don’t require central review. This is particularly dangerous when employees fall into that grey area between business travellers and assignees, and the resulting compliance costs often show up as unbudgeted overruns.
• Policies are “flexible” to encourage operational efficiency.

Why This Feels Safe

• Country teams often have local experience.
• Assignment volumes are low per region.
• HQ resources are limited, creating a culture of trust.

2. Why It’s Risky When It Comes to Cross-Border Assignees

Fragmented Oversight Leads to Errors

Nobody with overall oversight may easily lead to:

• Missing approvals for visa or work permits.
• Payroll miscalculations between home and host entity.
• Inconsistent documentation of assignment purpose or benefits.

Fragmented record-keeping and lack of oversight can escalate into formal review by authorities; see our article on audit triggers from mobility governance gaps for real-world examples.

Exposure Accumulates Quickly

Even small deviations can compound:

• Multiple short-term extensions may trigger tax or PE obligations.
• Local employment contracts may inadvertently bind the company to host-country obligations.
• Uncoordinated benefits create audit red flags.

This fragmentation often extends to assignment documentation itself, where letters are issued locally without any central review of tax or payroll implications.

One of the consequences of this fragmented approach is that changes in tax residence often go unnoticed until it is too late.

Without central monitoring of presence, duties and evolving circumstances, organisations frequently only become aware of expat tax residence issues when authorities look back and reassess prior years — a scenario that carries far greater financial and employee-relations consequences when tax residence is assessed retrospectively.

Fragmented responsibility also extends to how external advisers are engaged across the organisation.

Without a clear strategy, different teams may rely on different providers for overlapping issues, blurring the line between accounting execution and advisory oversight.

This is where understanding the role of cross border tax accountants versus cross border tax consultants becomes critical to maintaining consistency and avoiding gaps in risk identification.

Interesting insights also come from the OECD research on global mobility of internationally mobile employees.

3. How the Issue Typically Surfaces

Post-Year Review or Audit

• Misalignments are often discovered during year-end payroll reconciliations.
• External audits reveal missing approvals or documentation gaps.

Operational Signs of Poorly Set-Up International Assignments

• Employees ask multiple managers for approval of bespoke set-ups
• HR and Payroll disagree on allowances.
• Unexpected tax adjustments or penalties occur.

International Assignments – Case Scenario

A US-headquartered company allowed its regional office to approve short-term UK assignments without carrying out due diligence. Over 12 months:

• 7 international assignments exceeded 90 days
• UK Short-Term Visitors (STBV) rules and potential payroll requirements were not considered (i.e. no Appendix 4 application filed with HMRC)
• The local office failed to document visits (a key requirement under STBV rules), track extensions, or assess whether the activities performed required a UK work permit or payroll/tax reporting. Everyone simply assumed: < 6 months = no UK work permit, payroll or taxes.
• No Certificate of Coverage applied in the US to prevent UK National Insurance Contributions from being due.

Outcome: Company faced audit questions from both UKVI and HMRC.

Was it worth it?

For the UKVI audit, the company had to pay an UK Immigration specialist firm to help them defend their position. They were eventually able to demonstrate all worked carried out in the UK was within the permitted activities without a work permit (but they still incurred significant professional fees to address the matter).

For the HMRC audit, not only the company had to incur the same significant professional fees. In the end, HMRC also imposed retroactive payroll corrections (since no Appendix 4 or Certificate of Coverage had been applied for which would have prevented the need to operate a UK payroll) plus interest and penalties.

It is worth mentioning that the company was also involved is some fairly uncomfortable conversations with HMRC about the “economic employer” concept and related PE triggers (though in the end, HMRC did you pursue this particular aspect further thanks to the professional tax experts and litigators the company had engaged).

All of the above would have been preventable through proportionate central oversight and a forward-looking, risk-prevention approach to international assignments and short-term business travel.

4. What Earlier Intervention Looks Like

• Implement a central due diligence and review point for all assignments and short-term business trips no matter how short in duration.
• Standardise data collection across regions.
• Ensure cross-functional visibility: HR, Payroll, Tax.
• Maintain a single source of truth for assignment policies.

Central oversight does not require bureaucracy — but it does require visibility, accountability, and consistency.

This is true even when the employee requests to work remotely across borders for personal reasons taking advantage of a digital nomad visa which they will obtain (and pay for) themselves.

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