Finance Act 2006

Deduction of tax under PAYE.

16.— The Principal Act is, with effect from the passing of this Act, amended, in Chapter 4 of Part 42, by inserting, the following after section 985B (inserted by the Finance Act 2004 ):

PAYE: payment by intermediary.

985C.— (1) Subject to subsection (2), where any payment of emoluments of an employee is made by an intermediary of the employer, the employer shall be treated, for the purposes of this Chapter and regulations made under this Chapter, as making a payment of such emoluments of an amount equal to the amount referred to in subsection (3).

(2) Subsection (1) does not apply if the intermediary deducts income tax from the payment to the employee and accounts for it in accordance with this Chapter and regulations made under this Chapter.

(3) The amount referred to in this subsection is—

(a) if the amount of the payment made by the intermediary is an amount to which the recipient is entitled after deduction of any income tax, the aggregate of the amount of that payment and the amount of any income tax due, and

(b) in any other case, the amount of the payment made by the intermediary.

(4) For the purposes of this section, a payment of emoluments of an employee is made by an intermediary of the employer if it is made—

(a) by a person acting on behalf of the employer and at the expense of the employer or a person connected (within the meaning of section 10) with the employer, or

(b) by trustees holding property for any persons who include, or class of persons which includes, the employee.

PAYE: employee of non-resident employer, etc.

985D.— (1) In this section and sections 985E and 985F, ‘work’, in relation to an employee, means the performance of any duties of the office or employment of the employee and any reference to the employee working shall be construed accordingly.

(2) This subsection applies where—

(a) an employee, during any period, works for a person (in this section referred to as the ‘relevant person’) who is not the employee’s employer,

(b) any payment of emoluments of the employee in respect of work done in that period is made by a person who is the employer or an intermediary of the employer or of the relevant person,

(c) the person making the payment or, if that person makes the payment as an intermediary of the employer or of the relevant person, the employer is not resident in the State, and

(d) income tax is not deducted or accounted for in accordance with this Chapter and regulations made under this Chapter, by the person making the payment or, if that person makes the payment as an intermediary of the employer or of the relevant person, the employer.

(3) Where subsection (2) applies, the relevant person shall be treated, for the purposes of this Chapter and regulations made under this Chapter, as making a payment of emoluments of the employee of an amount equal to the amount referred to in subsection (4).

(4) The amount referred to in this subsection is—

(a) if the amount of the payment, referred to in subsection (2), actually made is an amount to which the recipient is entitled after deduction of any income tax, the aggregate of the amount of that payment and the amount of any income tax due, and

(b) in any other case, the amount of that payment actually made.

(5) Where, by virtue of section 985A, an employer is treated for the purposes of this Chapter and regulations made under this Chapter as making a payment of any amount to an employee, this section shall have effect—

(a) as if the employer were treated for the purposes of this section as making an actual payment of that amount, and

(b) as if paragraph (a) of subsection (4) were omitted.

(6) For the purposes of this section, a payment of emoluments of an employee is made by an intermediary of the employer or of the relevant person if it is made—

(a) by a person acting on behalf of the employer or the relevant person and at the expense of the employer or the relevant person or a person connected (within the meaning of section 10) with the employer or the relevant person, or

(b) by trustees holding property for any persons who include, or class of persons which includes, the employee.

PAYE: employment not wholly exercised in State.

985E.— (1) (a) In this section ‘appropriate person’ means the person designated by the employer for the purposes of this section, and if no person is so designated, the employer.

(b) In this section any reference to a payment made by the employer includes a reference to a payment made by a person acting on behalf of the employer and at the expense of the employer or a person connected (within the meaning of section 10) with the employer.

(2) This section applies in relation to an employee in a year of assessment only if the employee works or will work in the State and also works or is likely to work outside the State.

(3) Where in relation to any year of assessment it appears to an officer of the Revenue Commissioners that—

(a) some of the income of an employee to whom this section applies is assessable to income tax under Schedule E, but

(b) an as yet unascertainable proportion of the income may prove not to be so assessable,

then the officer may, on an application made by the appropriate person, give a direction for determining a proportion of any payment made in that year of, or on account of, income of the employee which shall be treated for the purposes of this Chapter and regulations made under this Chapter as a payment of emoluments of the employee.

(4) An application for a direction under subsection (3) shall provide such information as is available and is relevant to the giving of the direction.

(5) A direction under subsection (3)—

(a) shall specify the employee to whom and the year of assessment to which it relates,

(b) shall be given by notice to the appropriate person, and

(c) may be withdrawn by notice to the appropriate person from a date specified in the notice.

(6) The date specified under subsection (5)(c) may not be earlier than 30 days from the date on which the notice of the withdrawal is given.

(7) Where—

(a) a direction under subsection (3) has effect in relation to an employee to whom this section applies, and

(b) a payment of, or on account of, the income of the employee is made in the year of assessment to which the direction relates,

then the proportion of the payment determined in accordance with the direction shall be treated for the purposes of this Chapter and regulations made under this Chapter as a payment of emoluments of the employee.

(8) Where in any year of assessment—

(a) no direction under subsection (3) has effect in relation to an employee to whom this section applies, and

(b) any payment is made of, or on account of, the income of the employee,

then the entire payment shall be treated for the purposes of this Chapter and regulations made under this Chapter as a payment of emoluments of the employee.

(9) Subsections (7) and (8) are without prejudice to—

(a) any assessment in respect of the income of the employee in question, and

(b) any right to repayment of income tax overpaid and any obligation to pay income tax underpaid.

(10) In a case where section 985D applies—

(a) the references to the employer in subsection (1)(a) include references to the relevant person (within the meaning of that section), and

(b) any reference to a payment made by the employer includes a reference to a payment treated, for the purposes of this Chapter and regulations made under this Chapter, as made by the relevant person.

PAYE: mobile workforce.

985F.— (1) This section applies where it appears to the Revenue Commissioners that—

(a) a person (in this section referred to as the ‘relevant person’) has entered into or is likely to enter into an agreement that employees of another person (in this section referred to as the ‘contractor’) shall in any period work for, but not as employees of, the relevant person,

(b) payments of emoluments of the employees in respect of work done in that period are likely to be made by or on behalf of the contractor, and

(c) this Chapter and regulations made under this Chapter would apply on the making of such payments but it is likely that income tax will not be deducted or accounted for in accordance with this Chapter and such regulations.

(2) Where this section applies, the Revenue Commissioners may give a direction that if—

(a) any employees of the contractor work in any period for, but not as employees of, the relevant person, and

(b) any payment is made by the relevant person in respect of work done by the employees in that period,

income tax shall be deducted in accordance with this section by the relevant person on making that payment.

(3) A direction under subsection (2)—

(a) shall specify the relevant person and the contractor to whom it relates,

(b) shall be given by notice to the relevant person, and

(c) may at any time be withdrawn by notice to the relevant person.

(4) The Revenue Commissioners shall take such steps as are reasonably practicable to ensure that the contractor is supplied with a copy of any notice given under subsection (3) which relates to the contractor.

(5) Where—

(a) a direction under subsection (2) has effect, and

(b) any employees of the contractor specified in the direction work for, but not as employees of, the relevant person so specified,

income tax shall, subject to and in accordance with this Chapter and regulations made under this Chapter, be deducted by the relevant person on making any payment in respect of that work as if so much of the payment as is attributable to work done by each employee were a payment of emoluments of that employee.”.