In Grand UK Limited & others v HMRC [2018] UKUT 0096 the Upper Tribunal confirmed a dispute as to was the actual employer for PAYE. Was it the person who appeared to be the employer, or the person who actually paid the wages?

Various different entities ran activities from the Grand (a former hotel) in Folkestone over a period of years.

  • Mr Stainer was a chartered accountant and his wife an IT expert, they owned the various entities and did not run the payrolls.
  • It was claimed that there was some kind of a staff co-operative, there were no employment contracts, it was unclear from payslips which entity was the actual employer and various persons paid the staff.
  • HMRC, after enquiries with the owners, made ‘best judgement’ assessments under Regulation 80 for PAYE and for NICs apportioned between the different entities that it considered to be the employers. These were Mr and Mrs Stainer, who ran a partnership during the period and were directors of six companies involved and a couple of their companies. They set pay levels.
  • The bulk of the tax assessments fell on the Stainers.

The taxpayers appealed.

  • The FTT considered who according to ITEPA 2003 and the PAYE regulations was the employer and also whether any person could be deemed to be an employer on the basis of being an ‘other payer, according to Regulation 12. In following the decision in Oriel Support, the FTT decided that no other payers existed.
  • It then made findings of fact and determined that the actual employers could be identified.
  • It concluded that HMRC was largely correct in its allocations although it did alter some of the allocations between the Stainers and their companies.

The taxpayers appealled to the Upper Tribunal on the basis that the FTT had erred in law and had incorrectly interpreted regulation 12: they argued that as an employer could not be identified, the persons making the payment of net pay must be the employer. In this case that meant that two of the Stainer's other employees where the employer and a further companies.

The UT disagreed with the taxpayer's analysis, a person making a payment may do so in the capacity of an intermediary of the employer. They agreed that the FTT had erred and misinterpreted the law, however that had made not effect on the decision and the appeal was dismissed.


The PAYE regulations are notoriously complicated. This was an unusal case however it makes defining who is an employer or not slightly easier if you have the same facts (it is unusual though). Beware of some apparently conflicting commentaries on this topic online. 


Useful guides: 

Who is an employer for PAYE and NI?


Grand UK Limited & others v HMRC [2018] UKUT 0096

Grand UK Limited & others v HMRC [2016] TC4924