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Income Tax (Earnings and Pensions) Act 2003

Section 687: Payments by intermediary

2774.This section deals with payments made by intermediaries. It derives from section 203B of ICTA.

2775.Section 203B was introduced as part of a package of PAYE provisions in FA 1994. It prevents avoidance of PAYE by using an intermediary not subject to PAYE regulations to make payments. An example is an intermediary outside the UK tax net.

2776.Subsection (1) states the basic proposition that a payment of income by an intermediary is treated as a payment by the employer. This section (like others in this and later Chapters) refers explicitly to “employer” and “employee”. These terms take their meanings from section 712. The commentary on them uses the words in the same sense.

2777.Subsection (2) disapplies subsection (1) if the intermediary complies with the PAYE regulations. The wording in this Act makes it clearer that the intermediary must both deduct and account for tax in accordance with the PAYE regulations. See Note 58 in Annex 2.

2778.Similar clarifications have been made in sections 689(1)(d) and 691(1)(c).

2779.Section 203B(5) applies section 839 of ICTA to give the meaning of connected persons. Section 718 does that for this Act as a whole so no provision to that effect is needed in subsection (4).

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