Income Tax (Earnings and Pensions) Act 2003 section 688

Agency workers

Section 688 sets out how PAYE obligations apply when an individual provides services through an agency arrangement and their remuneration is treated as employment earnings under the agency worker rules.

• Where an individual's pay for services is treated as employment income under the agency worker rules, PAYE applies as if the individual were employed by the deemed employer (usually the agency)
• If someone other than the deemed employer or its intermediary pays the worker's PAYE income, that person is treated as an intermediary of the deemed employer for PAYE purposes
• Where the client (the end user of services) is not the deemed employer but a payment is made on behalf of and at the expense of the client, the client is treated as the employer for PAYE purposes instead of the deemed employer
• PAYE regulations may allow HMRC to recover unpaid PAYE amounts, including related interest and penalties, from directors or officers of a company that has failed to meet its PAYE obligations under the agency worker rules