PAYE81770 | PAYE operation: international employments: offshore employment intermediaries

Offshore employment intermediaries PAYE and NICs

Legislation was introduced in Finance Act 2014 to ensure the correct income tax and National Insurance Contributions (NICs) are paid by offshore employment intermediaries from 6th April 2014. The PAYE regulations were amended and regulations 84A to 84D inserted, to confirm who is responsible for operating PAYE where the offshore employer is not legally required to. The NICs guidance is at page NIM28000 of the National Insurance Manual.

UK Continental Shelf

The legislation applies where a person is employed on the UK Continental Shelf in the oil and gas industry by or through an offshore intermediary that is not subject to PAYE and hasn’t operated it voluntarily. The legislation works so that an onshore associate company of the offshore employer is firstly made responsible for operating PAYE and NICs.

If there is no onshore associate company, then the oil field licensee is made responsible for operating PAYE and NICs.

If the offshore employer voluntarily meets all PAYE and NICs obligations on behalf of the licensee, then HMRC will issue a certificate exempting the licensee from their PAYE and NICs obligations. As long as this certificate is in force, the licensee cannot be pursued for any PAYE or NICs due.

Agencies

The legislation also applies to UK agencies if they are part of the contractual chain. If so, the UK agency is responsible for operating PAYE and NICs.

Where there is no UK agency in the contractual chain, the client the employed person works for is responsible for operating PAYE and NICs.