SE11940 – PAYE avoidance: payment by an agency - example 1 - payments by an agency in readily convertible assets

Sections 203F and 203L ICTA1988

Example 1

• An individual works for a UK client
• the individual is hired to work for the client via a UK agency
• the worker is paid by an offshore intermediary of the client
• payment is made in readily convertible assets.

Is PAYE due on the payment by the overseas intermediary?

The overseas intermediary making the payment is outside the PAYE regulations but the remuneration arises under an agency agreement (see the Employer Status Manual (ESM)).

From 6 April 1998 a payment of readily convertible assets in these circumstances is treated as a payment by the agency (under Section 203L(1A) ICTA1988) for the purposes of Section 203F and accordingly the agency is required to operate PAYE.