UK company had an issue with the tax treatment applied on payments to a contractor. The contractor was also a director of the company. HMRC position was that the payments were within the scope of UK PAYE/NIC.
The legal relationship was examined on the nature of the payments made under the contracting agreement and the individual’s office as director of the company. The individual never received and payment from the company in the capacity of director or did not carry out any duties normally associated with a director of the company.
I was asked to assist the UK company accountants to formulate a submission to HMRC which involved an evaluation of the following issues:
Outcome HMRC agreed that the payments were not within the scope of PAYE/NIC and that the individual was responsible for payment of tax in their country of residence on this income.