PAYE for businesses

[Morticia]

A PSP (personal service provider) exists if:
- service is provided by a company or a trust - NOT an individual
- the service is provided via a person who is connected to the co/cc.
- the psp does not have at least 3 full-time employees who are not shareholders, members, beneficiaries or connected persons.

The requirement/possibility of a co/cc having PAYE deducted etc has been around for a number of years (cannot remember exact date..old age) and was specifically legislated to curb the abuse of taxpayers by resigning from their job, forming a co/cc, get re-employed by the same employer as "independent contractor" and claiming a myriad of fictitious expenses, avoiding monthly PAYE as employee, etc.

Yes, you must insist on getting an IRP5 certificate if a supplier insisted on deducting PAYE and you will get credit for this on final assessment. You may also deduct any PAYE deductions when calculating a provisional tax payment.

[Morticia]

Also, both the IRP6 (provisional tax) and IT14 (tax return) provide specifically for PAYE deductions, so as long as you get IRP5, you're o.k. (apart from the timing of the cash-flow implications, obviously)

Strictly speaking the onus is on your client to ascertain your true status and not the other way round. However, to avoid the whole thing, you need to advise the client in writing of the following (if applicable of course):

1 - you do not receive more than 80% of your income from one specific client
2 - you employ 3 or more full-time employees and they are engaged on a full-time basis in the business of your company (i.e. not "moonlighting" for you)
3 - your employees are not relatives/connected persons/shareholders/members etc to you or your company.
4 - although your duties are (presumably?) performed at the premises of your client, they have no control/supervision as to the manner of how you perform your duties.