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Income Tax (Earnings and Pensions) Act 2003

Section 691: Mobile UK workforce

2794.This section provides that where, in the case of a contractor providing their employees to a person, it is unlikely that PAYE will be deducted or accounted for, the Board of Inland Revenue may direct that that person must deduct and account for tax. It derives from section 203E of ICTA.

2795.Subsection (1) sets out the conditions for the section to apply and labels as the “relevant person” the person for whom the employees work. Subsection (1)(c) follows the approach taken in section 687. See Note 58 in Annex 2.

2796.Subsection (2) sets out what the Board may do by way of a direction. This is broadly to require the relevant person to deduct tax when making payments for the work. This need not be a payment to the employees. It may be a payment to the contractor.

2797.Subsection (3) sets out what the direction must do and how it may at any time be withdrawn.

2798.Subsection (4) requires the Board to try to give the contractor a copy of any direction.

2799.Subsection (5) deals with the effect of a direction under subsection (2). When there are employees of the contractor working for the relevant person then the relevant person is to make deductions in accordance with PAYE regulations from any payment made for the work done (whether a payment to the contractor or another person). This is to be done by treating the amount of the payment attributable to each employee’s work as if it were a payment of PAYE income to that employee.

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