Honoraria

Were payments to branch secretaries subject to PAYE?

The taxpayer was a trade union. It paid its branch secretaries an honorarium. The sums were paid quarterly and included reimbursement of expenses. The trade union did not operate PAYE on the honoraria. Instead the recipients declared them to HMRC and their PAYE codes were adjusted.

There was no suggestion from HMRC that the payments should be processed through PAYE until 2012. It then insisted that the honoraria should have been subject to PAYE – even though they had been taxed by other means – because the secretaries were office-holders for tax purposes under ITEPA 2003 s 5. It raised determinations under reg 80 of the Income Tax (PAYE) Regulations 2003 for the years 2010-11 to 2013-14 to recover tax of £108 000.

The taxpayer appealed.

The First-tier Tribunal said the branch secretaries were office-holders and always had been –...