PAYE75040 - PAYE operation: PAYE direct payment: when to use PAYE direct payment arrangement
The PAYE Direct Payment arrangement is used where
- It is established that there is employment income which is assessable
And
- There is likely to be tax liability because of the level of the income
And
- There is no employer to operate PAYE or it is considered impractical for the employer to operate PAYE
And
- The taxpayer is willing and able to operate PAYE correctly on their own income
Before agreeing to PAYE Direct Payment however, you should always consider if it is possible to come to some local arrangement by which PAYE can be operated in the normal wayfor the person involved.
Cases where there is no employer include
- Those employers to whom the PAYE regulations do not apply, such as overseas employers with no presence in the United Kingdom
And
- Embassies of overseas governments employing staff in the UK
You should set up the taxpayer as a self assessment case where
- You consider an employee is not willing to operate PAYE or not capable of doing it correctly
Or
- You close down a PAYE Direct Payment case because the taxpayer has failed to operate PAYE correctly