PAYE140055 - The PAYE discretion at s684(7A)(b) ITEPA 2003 and contractor loans avoidance schemes: contents: the PAYE discretion and Regulation 80 determinations

While HMRC regularly litigates on alternative bases, using the PAYE discretion and Regulation 80 determinations in relation to the same income may lead to uncertainty over who HMRC intends to recover tax from and uncertainty about how HMRC views compliance with the PAYE Regulations. 

HMRC may wish to consider issuing Regulation 80 determinations in the alternative after a decision has been made to exercise the PAYE discretion, particularly when a case is expected to lead to litigation, where the End Client’s identity or the UK Agency’s identity is known or could easily be discovered, and if it is considered appropriate to protect the Exchequer in the event of a Court disagreeing with HMRC’s use of the PAYE discretion. This should be considered on a case-by-case basis. Details of the case should be referred to the Counter Avoidance Operational Policy team who will consider whether it is appropriate to issue a Regulation 80 determination. 

HMRC may also wish to consider exercising the PAYE discretion in the alternative when a Regulation 80 determination has been issued, if it is considered appropriate to protect the Exchequer. This should be considered on a case-by-case basis. Details of the case should be referred to Counter Avoidance Operational Policy Team and a decision should be made about whether it is appropriate to exercise the PAYE discretion.

Officers should follow the normal guidance if they are considering issuing a Regulation 80 determination when the PAYE discretion is not in point.