SE11812 - PAYE avoidance: no trading arrangements

No trading arrangements

SE11810 explains that an asset will be a readily convertible asset if:

• either trading arrangements were in place when the asset was awarded; or
• trading arrangements are likely to exist in future.

It is important to remember that if, at the time the asset was awarded, there were no trading arrangements in place, nor an understanding or arrangement likely to lead to trading arrangements in future, the employer is not obliged to operate PAYE, even if trading arrangements subsequently come into existence.

For instance, where an employer transfers an asset to an employee (and the asset is not transferred in satisfaction of an entitlement to a monetary amount – see SE12002) the employer is not obliged to operate PAYE just because the employee may be able to sell the asset for a profit at a later date unless, at the time of the award, there were either trading arrangements in place for a future sale, or an understanding likely to lead to future trading arrangements. See example SE11827.