A4.471 Agreements for payment without deduction of tax at source
The duty to deduct tax from certain types of payment is outlined at A4.401. A statutory duty to deduct tax cannot be overridden by an agreement between the parties for tax not to be deducted.
Any agreement for the payment of interest, rent or other annual payment in full without the required deduction of tax is void1. This is interpreted as voiding, not the whole agreement, but only the part relating to payment in full2.
A similar provision applies to the duty to deduct tax from certain intellectual property royalties where the owner's usual place of abode is outside the UK. See A4.441.
Case law
The interpretation of this provision has been the subject of court decisions stretching back well over a century. The main principles
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