SE12030 - Non- cash remuneration: handling

Handling of PAYE/NIC avoidance cases

Before 1 April 1999 the Inland Revenue was responsible for collection of PAYE and the Contributions Agency for NIC. From 1 April 1999 IR merged with CA and collection of both PAYE and NIC became the responsibility of the Revenue.

Employment Income Technical has responsibility for the handling of schemes aimed at PAYE and NIC avoidance by providing employees with non-cash remuneration.

Co-ordination of appeals by Personal Tax

Since the early 1990s we have seen large numbers of cases involving payments in various forms of non-cash remuneration and in many instances employers and the Revenue have been unable to reach agreement on the correct tax treatment. Since some of these schemes were widely marketed by tax advisers, many of the cases we see are often almost identical in all material respects.

Consequently instead of asking General Commissioners to consider appeals in all these cases, Employment Income Technical co-ordinates the handling of all the PAYE and NIC appeals and selects a small number of representative cases for litigation. Paul Dunstall Organisation Ltd (see SE12003) and DTE Financial Services Ltd (see SE11809) are two examples.

The Revenue is challenging other schemes in which employers claim to have avoided PAYE because

• before 25 May 1994 the transfer of an asset did not represent a payment of assessable income subject to PAYE (see SE12001) ;
• after 25 May 1994 the provision of an asset was not a tradeable asset (see SE12013).

Further guidance

When decisions are final in these cases, Employment Income Technical will update these instructions with details of the schemes involved and issue guidance explaining how the decisions affect outstanding appeals. In the meantime for guidance on how to progress on PAYE and NIC aspects of these cases see SE12031 onwards.