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HMRC internal manual

Employment Income Manual

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HM Revenue & Customs
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PAYE: special type of payer or payee: agency workers: further examples

Sections 688 ITEPA 2003

Example: payment by an overseas intermediary in cashAn individual works for a client in the UK. The client hires the individual via an overseas agency. The worker is paid in cash. Payment is made by an overseas intermediary of the client.

Is PAYE due on the cash payment by the overseas intermediary?The payment is made by an overseas intermediary of the UK client. The intermediary is outside the jurisdiction of the PAYE regulations. So specific legislation transfers the obligation to operate PAYE to the UK client.

The client is deemed to be the employer (Sections 688(2) and 689 ITEPA 2003). As the payment to the worker was made by an intermediary of the client, Section 689(4) requires the client to account for PAYE on the cash payment made by the overseas intermediary on its behalf.
### Example: payment by a non-UK agent of the UK client in readily convertible assetsA worker is engaged to work on a construction project in the UK by a UK client. The worker is engaged by the client via an agency overseas. The worker is paid in readily convertible assets (see

EIM11855). Payment is made by a non-UK agent of the UK client.
### Is PAYE due on the payment by the UK client?The agency is deemed to be the employer (Section 688(1) ITEPA 2003) and consequently the agency is deemed to have made the payment to the worker under Section 689 ITEPA 2003. However the agency is based overseas and outside the jurisdiction of the PAYE regulations.

Section 689(4) says that, where an individual works for one person but is paid by another to whom the PAYE regulations do not apply, the requirement to operate PAYE within Part 11 Chapter 4 ITEPA 2003 falls on the person for whom the work is carried out. In this example that is the UK client. Section 696 requires the operation of PAYE where PAYE income is provided in the form of a readily convertible asset.

Therefore the UK client is required to operate PAYE.