Part 11Pay As You Earn

Chapter 3PAYE: special types of payer or payee

F1690DEmployer notification for qualifying new residents F2or treaty non-residents

(1)

This section applies in relation to an employee if—

(a)

the employee is or is likely to be a qualifying new resident for a tax year (“the F3notifiable year”), and

(b)

the employee works or is likely to work outside the UK during the F4notifiable year.

F5(1A)

This section also applies in relation to an employee if—

(a)

the employee is or is likely to be a treaty non-resident at any time in a tax year (“the notifiable year”), and

(b)

the employee works or is likely to work outside the UK during the notifiable year.

(2)

F6If this section applies in relation to the employee by virtue of subsection (1), the appropriate person may give a notice to an officer of Revenue and Customs at any time during the F7notifiable year—

(a)

that the employer is proposing to treat the foreign proportion of any qualifying payment made by the employer to the employee as not being PAYE income of the employee for the purposes of PAYE regulations, and

(b)

specifying that proportion F8(but see subsections (5A) and (5B)).

F9(2A)

If this section applies in relation to the employee by virtue of subsection (1A), the appropriate person may give a notice to an officer of Revenue and Customs at any time during the notifiable year—

(a)

that the employer is proposing to treat the treaty relieved proportion of any treaty affected payment made by the employer to the employee as not being PAYE income of the employee for the purposes of PAYE regulations, and

(b)

specifying that proportion (but see subsections (5A) and (5B)).

(3)

For the purposes of this section and section 690E—

(a)

a “qualifying payment” means a payment of, or on account of, an amount of employment income of the employee that is likely to be qualifying employment income;

(b)

the “foreign proportion” of a qualifying payment is F10—

(i)

the best estimate that can reasonably be made of the overall proportion of the amount of all qualifying payments made by the employer to the employee that is likely to be qualifying foreign employment income, F11or

;

(ii)

if the best estimate mentioned in sub-paragraph (i) is greater than 30%, 30%.

F12(c)

a “treaty affected payment” means a payment of, or on account of, an amount of employment income of the employee a proportion in respect of which UK tax is likely to be relieved under double taxation arrangements as a result of the employee being treaty non-resident in the notifiable year;

(d)

the “treaty relieved proportion” is the best estimate that can reasonably be made of the overall proportion of the amount of all treaty affected payments made by the employer to the employee in respect of which UK tax is likely to be relieved under double taxation arrangements.

(4)

If a notice given under this section has effect, the proportion of any qualifying payment F13or treaty affected payment (as applicable) made by the employer to the employee in any tax year which is to be treated for the purposes of PAYE regulations as not being a payment of PAYE income is the proportion specified in the notice.

(5)

A notice given under this section—

(a)

does not have effect if a direction has previously been given to the appropriate person under section 690E (direction by HMRC in relation to qualifying new residents F14or treaty non-residents) in relation to the employee and the F15notifiable year;

(b)

otherwise, has effect when it is acknowledged by an officer of Revenue and Customs.

F16(5A)

Subsection (5B) applies for the purposes of determining the proportion to be specified in a notice or notices under this section in circumstances where, if the notice or notices were to be given and acknowledged by an officer of Revenue and Customs, a notice given under both subsection (2) and subsection (2A) would have effect in relation to the employee and the notifiable year.

(5B)

The proportion specified in the notice or notices must produce the result that no amount is reflected in both—

(a)

the foreign proportion specified in the notice under subsection (2) as an amount that is likely to be qualifying foreign employment income, and

(b)

the treaty relieved proportion specified in the notice under subsection (2A) as an amount in respect of which UK tax is likely to be relieved under double taxation arrangements.

(6)

A notice given under this section ceases to have effect if—

(a)

a direction under section 690E is given to the appropriate person in relation to the employee and the F17notifiable year,

F18(aa)

as a result of a change in the employee’s circumstances, the proportion specified in the notice ceases to be a reasonable estimate of the overall proportion of the amount (as applicable) of—

(i)

all qualifying payments that is likely to be qualifying foreign employment income, or

(ii)

all treaty affected payments in respect of which UK tax is likely to be relieved under double taxation arrangements,

F19(b)

a subsequent notice—

(i)

is given by the appropriate person in relation to the employee and the notifiable year under the same subsection, and

(ii)

is acknowledged by an officer of Revenue and Customs,

(c)

the appropriate person notifies (in writing or otherwise) an officer of Revenue and Customs that the notice is to cease to have effect, or

(c)

a subsequent notice—

(i)

is given by the appropriate person under section 690A (employer notification for internationally mobile employee) on the basis that the employee is or is likely to be non-UK resident in the F20notifiable year, and

(ii)

is acknowledged by an officer of Revenue and Customs.

(7)

A notice given under this section must be in such manner and form, and contain such information, as may be specified in a general direction made by the Commissioners for His Majesty’s Revenue and Customs.

(8)

Subsection (4) is without prejudice to—

(a)

any assessment in respect of the income of the employee in question, and

(b)

any right to repayment of income tax and any relevant debts overpaid and any obligation to pay income tax underpaid and any relevant debts that remain wholly or partly unpaid.

(9)

For the purposes of this section and section 690E—

(a)

where an amount of employment income is treated as PAYE income paid by the employer for the purposes of PAYE regulations by virtue of section 687A or 695A (employment income under Part 7A) or section 696 (readily convertible assets), the employer is to be treated as making payment of that amount of employment income, ...

(b)

“qualifying new resident”, “qualifying employment income” and “qualifying foreign employment income” have the same meaning as in Chapter 5C of Part 2 (relief for new residents on foreign employment income).

F21(c)

an individual is “treaty non-resident” at any time if, at that time, the individual falls to be regarded as resident in a territory outside the UK for the purposes of double relief arrangements having effect at the time, and

(d)

“double taxation arrangements” means arrangements that have effect under section 2(1) of TIOPA 2010.