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HMRC internal manual

PAYE Manual

From
HM Revenue & Customs
Updated
, see all updates

PAYE operation: aspects of PAYE operation - employer: when it is not practical to operate PAYE

Occasionally you will find circumstances where there is

  • Income assessable as PAYE income

But

  • There is no employer to operate PAYE or it is considered impractical to operate PAYE

In such cases, follow the advice below

  • Contact the Employer to discuss whether it is possible for them to operate PAYE

If the Employer cannot operate PAYE

  • Consider if Direct Payment (this is where the taxpayer operates PAYE for himself or herself) is appropriate. See ‘PAYE direct payment’ at PAYE75000 onwards

If Direct Payment is not appropriate, the only alternative is to bring the taxpayer into self assessment

  • Ask the taxpayer if they are to be responsible for their own National Insurance Contributions (NICs)
  • If the taxpayer is in any doubt, explain that they will have to take the matter up with the National Insurance Contributions Office

If the taxpayer is to be responsible for his or her own NICs

  • Ask your Employer section to

    • Set up a DCNI scheme
    • Enter the scheme details in the ‘DC and DP Cases’ employer-related electronic file. The employer-related electronic file is then used in early March each year to control the issue of National Insurance Contribution material to the taxpayer

    See ‘DCNI scheme - direct collection (employee only NIC) (Action Guide)’ at PAYE20091 

  • Issue manually to the taxpayer the employer starter pack, as detailed in ‘DCNI scheme - direct collection (employee only NIC)’ at PAYE20090 
  • Pass the papers to the Self Assessment team, to bring the taxpayer into self assessment

If the taxpayer is not to be responsible for his or her own NIC

  • Pass the papers straight to the Self Assessment team, to bring the taxpayer into self assessment