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HMRC internal manual

Employment Income Manual

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HM Revenue & Customs
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PAYE: meaning of readily convertible assets: trading arrangements: employer's arguments

Section 702 ITEPA 2003

Various arguments have been put forward to support the view that trading arrangements do not exist in respect of an asset provided to an employee in lieu of remuneration and hence that the employer is not required to operate PAYE. Broadly these rely on taking a narrow view of the definition contained in the legislation such as:

  • the employer was not party to the arrangements
  • the employee was not party to the arrangements
  • there was no guarantee of the amount that the employee would realise under the arrangements.

These arguments have been put forward in a variety of PAYE and NIC avoidance schemes involving payments in assets such as platinum sponge, oriental carpets, gold coins, gold jewellery, trade debts, ECU bank accounts and many others.

HMRC does not accept that the definition should be constrained and instead considers that the definition should be construed widely.