Income Tax (Earnings and Pensions) Act 2003 section 61N

Worker treated as receiving earnings from employment

Section 61N establishes when a worker who provides services through an intermediary is treated as receiving employment earnings, and determines which person in the contractual chain is responsible for operating PAYE on those deemed earnings.

• Where the off-payroll working rules apply, a "deemed direct payment" of employment earnings is created, normally falling on the fee-payer (the person in the supply chain immediately above the intermediary) to account for PAYE and National Insurance
• Responsibility for operating PAYE can shift — to the client if no status determination statement has been issued, or up the chain if the fee-payer is non-UK-resident, controlled by the worker, or otherwise not a "qualifying person"
• For private sector clients, the rules only bite where the client qualifies as medium or large and has a UK connection; public authorities are always within scope regardless of size
• Where a payment covers both the worker's services and other matters (such as materials or multiple workers), a just and reasonable apportionment must be made to identify the element that relates to the individual worker's services