Employment Income: Scope |
27 |
appears to the Revenue that tax will not be deducted or accounted for as usual.172 Whenever schedule E is extended to workers, the PAYE regulations will follow—so workers supplied by agencies are brought within schedule E by section 44 and so, potentially, within PAYE.173 The PAYE regulations also apply where intermediaries such as personal service companies are involved.174 The court has intervened to compel the Revenue to grant relief in the taxpayer’s PAYE coding for Lloyds losses against pension income.175 The Revenue wanted to delay for giving the relief since the loss could not be determined until the end of the year but the court saw no reason why a coding could not be made on a provisional basis. Everyone accepted that loss would wipe out tax liability so that it was a simple cash flow exercise. |
13A.4.2.3 International |
The obligation on an employer to operate the PAYE system arises if he has a sufficient tax presence in the UK. For this purpose, a non-resident company carrying on business in the UK through a branch agency has a sufficient presence.176 This obligation is widened by two provisions. First, where an employee works for a person based in the UK, but the actual employer is based overseas (and so outside the PAYE regulations), the person for whom the employee is working can be made to apply the PAYE system on behalf of the employer (section 203C). The same burden falls on the person for whom the work is done where someone other than the employer makes the payment and is also outside the UK.177 The second situation arises where an employee is not resident in the UK or, if resident, is not ordinarily resident here; the PAYE system is designed to apply only to those emoluments which are for work done in the UK.178 The practical problem is that when the payments are actually made it may be unclear how much of the remuneration will be taxable. Employers may ask for a direction as to the proportion to be subject to PAYE; if no direction is sought, the whole payment is subject to the system. |