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Obtaining clearance from the Tax Team

The engagement and payment for services where the engaging department does not propose to make payment through payroll must be cleared by the Tax Team.

To obtain clearance, an online FD3 form must be completed, which the Tax Team will review in line with the factors outlined in section 3 to determine whether there is a ‘deemed employment’ status. Unless further information is required or the case needs to be referred to HMRC, a decision will be given within 10 working days of receipt.

If it is decided that this would be a ‘deemed employment’ then payment is likely to be made via the UPS system. Individuals may be classed as workers and paid via a UPS2 form whilst Off-payroll workers engaged through Limited Companies, Partnerships or Agencies would be paid via the submission of a UPS4 form.

If not classed as ‘deemed employment’ then the Tax Team will issue you with a Tax Clearance Number and the supplier can be paid gross via UFS on an invoice basis. However, please bear in mind the compliance issues regarding the ongoing relationship.


There are certain transactions that may be an exception to the rules about “deemed employment”. These are summarised below but please see the following paragraphs for details of conditions that apply to each.

The University Payment System (UPS) was introduced in April 2012 to facilitate payments for these services where they meet the specified tests.

Full details on the UPS system can be found here.

The following categories of transactions may be entered onto UFS without obtaining clearance from the Tax Team

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