SE11941 – PAYE avoidance: payment by an intermediary - example 2 - payment by an overseas intermediary in cash

Sections 203B and 203L ICTA1988

Example 2

• An individual works for a client in the UK
• the client hires the individual via an overseas agency
• the worker is paid in cash
• payment is made by an overseas intermediary of the client.

Is PAYE due on the cash payment by the overseas intermediary ?

The payment is made by an overseas intermediary of the UK client who is outside the PAYE regulations but specific legislation transfers the obligation to operate PAYE to the UK client.

From 6 April 1998 the client is deemed to be the employer (Section 203L(1B) ICTA 1988) and since the payment to the worker was made by an intermediary of the client, Section 203B requires the client to account for PAYE on the cash payment made by the overseas intermediary on its behalf.