Louis Andre Monteil v Board of Inland Revenue (Trinidad and Tobago)

PAYE is a collection mechanism, not necessarily an exclusive route for recovering income tax on employment income. The underlying liability remains with the employee, subject to the protection that liability ends to the extent tax has been deducted or withheld. Where PAYE has not secured the full amount, the Revenue may use the ordinary assessment, additional-assessment and recovery provisions of the Income Tax Act. The statutory language must be interpreted in the context of the Act as a whole. An additional assessment may therefore be raised against the employee, subject to any substantive challenge to the characterisation of the income.

The appellant, an employee of companies in the CLICO group, challenged an income tax assessment covering emolument income, additional tax and interest. The substantive challenges to the categorisation of the income remained pending before the Tax Appeal Board.

On a preliminary issue, the Tax Appeal Board held that the Revenue could assess the employee under sections 83 or 89 of the Income Tax Act, and that the employee remained liable under section 79(7) if the employer had failed to deduct and remit PAYE. The Court of Appeal dismissed the appeal on 18 November 2022. The central issue before the Privy Council was whether PAYE was the mandatory and exclusive means of recovering unpaid tax on emoluments.

Appeal dismissed. The Board answered the first question in the affirmative and the remaining three questions in the negative.

1. The relevant statutory provisions had to be interpreted by seeking the meaning of Parliament’s words in their statutory context. The PAYE provisions therefore had to be read alongside the wider scheme of the Income Tax Act.
2. Section 5 imposed the underlying charge to income tax on employment gains, profits and emoluments. The PAYE regime did not transfer that underlying liability from the employee to the employer. Sections 99(3) and 99(10) strongly confirmed that conclusion: tax deducted or withheld was deemed received by the employee, and the employee ceased to be liable only to the extent of the amount deducted or withheld.
3. The opening words of section 99(1), which operated notwithstanding other provisions of the Act, enabled the PAYE mechanism but did not exclude other means of assessment and recovery where PAYE had not secured the full tax due. The employer’s PAYE obligations were separate from, and co-existed with, the employee’s liability.
4. Sections 83 and 89, together with the provisions governing notices of assessment, objections, appeals and recovery, empowered the Revenue to raise an additional assessment against an employee whose employer had failed to deduct sufficient tax. The Board’s analysis was supported by Unilever Caribbean Ltd v Board of Inland Revenue, which the Board explained as treating PAYE as self-contained without excluding the employee’s separate liability. The United Kingdom authorities Bernard & Shaw Ltd v Shaw and Demibourne Ltd v Revenue and Customs Commissioners provided no direct assistance because they depended on United Kingdom regulations, although the Trinidad and Tobago Act achieved a similar result.
5. Section 79(7) did not apply on the facts because the appellant had not made the type of return disclosing emolument income that had not been fully subjected to employer deductions. It nevertheless illustrated that employee liability could subsist notwithstanding PAYE. The disputed additional assessment under section 89 was therefore lawful.

1. Privy Council — The appeal was dismissed. [2024] UKPC 37
2. Court of Appeal of the Republic of Trinidad and Tobago — On 18 November 2022, the Court of Appeal dismissed the appeal from the preliminary ruling of the Tax Appeal Board.
3. Tax Appeal Board — On 2 February 2017, the Board held that the Revenue could assess the employee under sections 83 or 89 of the Income Tax Act and that the employee remained liable where the employer had failed to deduct and remit PAYE.