Income Tax (Earnings and Pensions) Act 2003 section 688AB

Workers' providing services through intermediaries etc: cases where taxes already paid

Section 688AB allows PAYE regulations to prevent double taxation where a worker has provided services through an intermediary and tax has already been paid on the income in question, by treating the PAYE liability of the deemed employer as satisfied to the extent that tax has already been accounted for.

• Where an end client or fee-payer (the "deemed employer") is liable under the off-payroll working rules to account for PAYE on a deemed direct payment to a worker, the liability can be reduced if income tax or corporation tax has already been paid or assessed on income relating to that payment.
• The amount treated as already recovered from the worker is based on the best estimate that an HMRC officer can reasonably make of the tax already paid or assessed.
• Once an amount has been treated as recovered from the worker under these provisions, the regulations can prevent specified persons from claiming repayment of, or relief for, the tax already paid, or from setting it off against other tax liabilities — this avoids double relief.
• These provisions do not apply where the deemed employer's liability arises solely as a result of the anti-avoidance rule in section 61WA.

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