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HMRC internal manual

Employment Status Manual

Basic principles: off-payroll working: what happens when there is a payment from a relevant engagement on or after 6 April 2017

Income Tax (Earnings and Pensions) Act 2003, Part 2, Chapter 10, section 61N

Regulation 6(3) SI 2000 No. 727

Where an intermediary has an engagement with a client who does not fall within the definition of “public authority” then the position remains the same as before 6 April 2017 (see ESM8085 & ESM8090).

Where an intermediary has an engagement with a public authority and the legislation at Chapter 10 ITEPA 2003 applies then;

  • The fee-payer is treated as making a payment to the worker, and the worker is treated as receiving, a payment which is to be treated as earnings from an employment (“the deemed direct payment”).  That deemed direct payment is then treated as made at the same time as the chain payment made by the fee-payer.


Where the legislation applies it has the following effect;

  • The fee-payer is responsible for the deduction of tax and National Insurance from the gross payment, exclusive of VAT, and will account for these amounts to HMRC via RTI in the same way as for direct employees. For NICs purposes the fee-payer is also therefore treated as the secondary contributor.
  • The intermediary receives the chain payment from the person lowest in the chain, this is not necessarily the fee-payer.(See examples at ESM9035)
  • The worker receives a payment treated as earnings from an employment which has had tax and NICs deducted from it at source by the fee-payer.