Taxes Consolidation Act 1997 section 985C

PAYE: payment by intermediary

Section 985C deals with the PAYE obligations of an employer who uses an intermediary to make payments of emoluments to employees.

• Where an intermediary pays emoluments on behalf of an employer, the intermediary is in the first instance responsible for operating PAYE; however, if the intermediary fails to do so, the employer is treated as having made the payment and must account for PAYE.
• The section does not apply where the intermediary correctly deducts income tax from the payment and accounts for it under the PAYE system.
• If the payment to the employee is a net (after-tax) amount, the employer must account for PAYE on the grossed-up figure; otherwise PAYE applies to the actual amount paid.
• An intermediary is a person acting on behalf of and at the expense of the employer (or a person connected with the employer), or trustees holding property for a class of persons that includes the employee.