PAYE81521 | PAYE operation: international employments: globally mobile employee PAYE notification - HMRC direction

Sections 690B & 690E ITEPA 2003

Where a globally mobile employee (‘GME’) PAYE notification has been made, it may become apparent to an officer of HMRC that a different proportion to the one specified in that notification should be treated as not being PAYE income.

Where this occurs, an officer of HMRC may give a direction specifying that either a different proportion should be treated as not being PAYE income, or that the entirety of relevant payments should be treated as being PAYE income. For the purposes of this guidance such a direction is referred to as a GME PAYE direction.

A GME PAYE direction is made under:

• section 690B ITEPA 2003 where the notification was made under section 690A ITEPA 2003, and affects uncertain payments,

• under section 690E ITEPA 2003 where the notification was made under section 690D ITEPA 2003, and affects qualifying payments, and treaty affected payments.

The requirement for the employee to file a Self-Assessment return at the end of the year remains even if a direction is issued.

A GME PAYE direction will supersede a notification made by an appropriate person and this cannot be displaced by a further notification given under the same legislation as the previous notification submitted for that tax year.

However, the employer may recognise a change in circumstances of the employee such that a notification could be made under the other notification provisions. A direction does not prevent a new notification being made for a tax year if the notification is made under a different provision. This means that if a direction has been issued under 690B, it does not prevent a notification being made under section 690D, and if a direction has been issued under section 690E, this does not prevent a notification being made under section 690A.

Example

An employer has made a notification under section 690A to operate PAYE on a proportion of an employee’s income on the basis that the employee is non-UK resident for a tax year and is working both in and outside the UK in that tax year and HMRC has acknowledged receipt of the notification. Subsequently, an officer of HMRC comes to the view that a different proportion than the one specified within the notice should be treated as not being PAYE income.

The officer issues a direction under section 690B which alters the proportion of income which is treated as not being PAYE income. Later in that tax year the employer and employee become aware that the employee will be UK resident in that tax year under the Statutory Residence Test. Further, the employee will be a qualifying new resident in that tax year.

As some of the employee’s duties are performed outside the UK in that tax year, the employer can make a new notification under section 690D which would mean the direction issued by HMRC relating to the section 690A notification would then cease to have effect, once HMRC has acknowledged receipt of the new notification.

An officer of HMRC would be able to issue a direction under section 690E if it was later required.

What happens if an employer disagrees with a direction, or considers that a new direction is required?

If the employer disagrees with a direction issued for the tax year, they may make representations to HMRC, providing the reasons for their disagreement, together with any supporting evidence they would like HMRC to consider. You can contact us on the telephone number or at the address provided on the letter containing the direction.

Similarly, if the employee’s circumstances change after a direction is issued, the employer can request HMRC to consider issuing a revised direction.

If HMRC are satisfied that a direction specifying a different proportion than the one previously issued is appropriate, then they will issue a subsequent direction.