INCOME TAX Citation and Commencement 1 These Regulations may be cited as the Income Tax (Pay As You Earn) (Amendment) (No. 2) Regulations 2024 and come into force on 6th April 2024. Amendment of the Income Tax (Pay As You Earn) Regulations 2003 2 1 The Income Tax (Pay As You Earn) Regulations 2003 are amended as follows. 2 In Part 4, after regulation 72G, insert— Application of Regulation 72GB 72GA 1 Regulation 72GB applies where— a an amount of income tax or corporation tax has been— i paid, or ii assessed in respect of a payment received by the intermediary that is subsequently treated as a deemed direct payment, b the deemed direct payment was made on or after 6th April 2017, c HMRC are in receipt of one or more tax returns, which include an amount of tax that appears to be referable to that deemed direct payment, d a trigger event has occurred, and e the trigger event did not occur before 6th April 2024. 2 The following are trigger events— a HMRC serve notice of a determination made under regulation 80 of these Regulations (determination of unpaid tax and appeal against determination) that includes tax in respect of the deemed direct payment, b HMRC receive a letter of offer, c HMRC serve a recovery notice under Chapter 5 of Part 4 of these Regulations (debts arising under Chapter 10 of Part 2 of ITEPA), where it would be impractical to recover by way of a determination made under regulation 80, or d when a determination made under regulation 80 becomes final and conclusive and that determination includes tax in respect of the deemed direct payment. 3 In this regulation— “ intermediary ” has the meaning given in section 61M(1)(c) of ITEPA; “ letter of offer ” means an offer in writing by the deemed employer to agree an amount in settlement of the deemed employer’s liability to pay an amount that includes tax on the payment. 4 In this regulation and regulations 72GB and 72GC— “ deemed direct payment ” has the meaning given in section 61N of ITEPA . 5 For the purposes of this regulation and regulations 72GB and 72GC, tax is assessed if it— a is included in a return under section 8 of the Taxes Management Act 1970 which includes a self-assessment, or under Schedule 18 to the Finance Act 1998 , and b takes into account any reliefs, including reliefs from income tax, included in the return or returns. Recovery of taxes 72GB 1 Where this regulation applies, HMRC may direct an amount to be treated as having been recovered from the payee and for that amount not to be recoverable from the deemed employer where— a the deemed employer would otherwise be liable to pay an amount in consequence of being treated under section 61N(3) of ITEPA as having made a deemed direct payment to a worker (other than by virtue of section 61WA of ITEPA) , and b an amount of income tax or corporation tax has been paid or assessed in respect of the deemed direct payment. 2 The amount referred to in the opening words of paragraph (1) may be the best estimate which can reasonably be made by an officer of Revenue and Customs (whether generally or specifically) of the amount referred to in paragraph (1)(b). 3 The direction may be in respect of one or more amounts of income tax or corporation tax that fall within regulation 72GA(1)(a). 4 A direction must be made by notice to the deemed employer and the payee, subject to paragraph (7), stating— a the date the notice was issued, b the amount to be treated as having been recovered, and c the services provided in respect of which the deemed direct payment within regulation 72GA(1)(a) was treated as having been made. 5 A direction may be combined with one or more directions relating to the same deemed employer and may be made by issuing one notice to that deemed employer, but each payee must be issued with a separate notice. 6 The amount referred to in paragraph (4)(b) will be the overall recovered amount. 7 A notice need not be issued to a payee if HMRC or the deemed employer are unaware of the current address of the payee. 8 The payee may not— a make a claim for the repayment of, or relief in respect of, the amount of income tax or corporation tax referred to in regulation 72GA(1)(a), or b deduct, or set off, the amount of tax referred to in regulation 72GA(1)(a) from or against any income tax or corporation tax liability. Appeal against a direction notice 72GC 1 A payee may appeal against a direction notice under regulation 72GB— a by notice to HMRC, b within 30 days of the issue of the direction notice, and c specifying the grounds of appeal. 2 For the purposes of paragraph (1), the grounds of appeal are that— a the payee did not receive the deemed direct payment, b no tax has been paid or assessed on the deemed direct payment, c the amount that is treated as being recovered from the payee is incorrect, or d none of the trigger events set out in regulation 72GA occurred. 3 On an appeal under paragraph (1) that is notified to the tribunal, the tribunal may— a if it appears that the direction should not have been made, set aside the direction, b if it appears that the amount specified in the notice is incorrect, increase or reduce the amount accordingly, or c if it appears that the direction was correctly made, uphold the direction. . 3 In Part 9 of the Income Tax (Pay As You Earn) Regulations 2003— a in regulation 185(6) in the definition of “direction tax”, after “72F”, insert “, regulation 72GB” , and b in regulation 188(7) in the definition of “direction”, after “72F”, insert “, or regulation 72GB” . Jonathan Athow Penny Ciniewicz Two of the Commissioners for His Majesty's Revenue and Customs 11th March 2024