Session 2019-21
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Notices of Amendments: 20 May 2020                     

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60C    

When a company qualifies as small for a tax year: subsidiaries

 

(1)    

A company does not qualify as small for a tax year by reason of the

 

condition in section 60A(3) being met if—

 

(a)    

the company is a member of a group at the end of its last

 

financial year that is relevant to the tax year,

 

(b)    

the company is not the parent undertaking of that group at the

 

end of that financial year, and

 

(c)    

the undertaking that is the parent undertaking of that group at

 

that time does not qualify as small in relation to its last

 

financial year that is relevant to the tax year.

 

(2)    

Where the parent undertaking mentioned in subsection (1)(c) is not a

 

company, sections 382 and 383 of the Companies Act 2006 have

 

effect for determining whether the parent undertaking qualifies as

 

small in relation to its last financial year that is relevant to the tax year

 

as if references in those sections to a company and a parent company

 

included references to an undertaking and a parent undertaking.

 

(3)    

For the purposes of subsections (1)(c) and (2) a financial year of an

 

undertaking that is not a company is “relevant to” a tax year if it ends

 

at least 9 months before the beginning of the tax year.

 

(4)    

For the purposes of this section, a financial year of a company is

 

“relevant to” a tax year if the period for filing the company’s accounts

 

and reports for the financial year ends before the beginning of the tax

 

year.

 

(5)    

Expressions used in this section and in the Companies Act 2006 have

 

the same meaning in this section as in that Act.

 

60D    

When a relevant undertaking qualifies as small for a tax year

 

(1)    

Sections 60A to 60C apply in relation to a relevant undertaking as they

 

apply in relation to a company, subject to any necessary modifications.

 

(2)    

In this section “relevant undertaking” means an undertaking in respect

 

of which regulations have effect under—

 

(a)    

section 15(a) of the Limited Liability Partnerships Act 2000,

 

(b)    

section 1043 of the Companies Act 2006 (unregistered

 

companies), or

 

(c)    

section 1049 of the Companies Act 2006 (overseas

 

companies).

 

(3)    

Expressions used in this section and in the Companies Act 2006 have

 

the same meaning in this section as in that Act.

 

60E    

When other undertakings qualify as small for a tax year

 

(1)    

An undertaking that is not a company or a relevant undertaking

 

qualifies as small for a tax year if one of the following conditions is

 

met.

 

(2)    

The first condition is that the undertaking’s first financial year is not

 

relevant to the tax year.

 

(3)    

The second condition is that the undertaking’s turnover for its last

 

financial year that is relevant to the tax year is not more than the


 
 

Notices of Amendments: 20 May 2020                     

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Finance Bill, continued

 
 

amount for the time being specified in the second column of item 1 of

 

the Table in section 382(3) of the Companies Act 2006.

 

(4)    

For the purposes of this section a financial year of an undertaking is

 

“relevant to” a tax year if it ends at least 9 months before the beginning

 

of the tax year.

 

(5)    

In this section—

 

“relevant undertaking” has the meaning given by section 60D,

 

and

 

“turnover”, in relation to an undertaking, means the amounts

 

derived from the provision of goods or services after the

 

deduction of trade discounts, value added tax and any other

 

taxes based on the amounts so derived.

 

(6)    

Expressions used in this section and in the Companies Act 2006 have

 

the same meaning in this section as in that Act.

 

60F    

When other persons qualify as small for a tax year

 

(1)    

For the purposes of this Chapter, a person who is not a company,

 

relevant undertaking or other undertaking qualifies as small for a tax

 

year if the person’s turnover for the last calendar year before the tax

 

year is not more than the amount for the time being specified in the

 

second column of item 1 of the Table in section 382(3) of the

 

Companies Act 2006.

 

(2)    

In this section—

 

“company” and “undertaking” have the same meaning as in the

 

Companies Act 2006,

 

“relevant undertaking” has the meaning given by section 60D,

 

and

 

“turnover”, in relation to a person, means the amounts derived

 

from the provision of goods or services after the deduction of

 

trade discounts, value added tax and any other taxes based on

 

the amounts so derived.

 

60G    

Sections 60A to 60F: connected persons

 

(1)    

This section applies where—

 

(a)    

it is necessary for the purposes of determining whether a

 

person qualifies as small for a tax year (“the tax year

 

concerned”) to first determine the person’s turnover for a

 

financial year or calendar year (“the assessment year”), and

 

(b)    

at the end of the assessment year the person is connected with

 

one or more other persons (“the connected persons”).

 

(2)    

For the purposes of determining whether the person qualifies as small

 

for the tax year concerned the person’s turnover for the assessment

 

year is to be taken to be the sum of—

 

(a)    

the person’s turnover for the assessment year, and

 

(b)    

the relevant turnover of each of the connected persons.


 
 

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(3)    

In subsection (2)(b) “the relevant turnover” of a connected person

 

means—

 

(a)    

in a case where the connected person is a company, relevant

 

undertaking or other undertaking, its turnover for its last

 

financial year that is relevant to the tax year concerned, and

 

(b)    

in a case where the connected person is not a company,

 

relevant undertaking or other undertaking, the turnover of the

 

connected person for the last calendar year ending before the

 

tax year concerned.

 

(4)    

For the purposes of subsection (3)(a)—

 

(a)    

a financial year of a company or relevant undertaking is

 

relevant to the tax year concerned if the period for filing

 

accounts and reports for the financial year ends before the

 

beginning of the tax year concerned, and

 

(b)    

a financial year of any other undertaking is relevant to the tax

 

year concerned if it ends more than 9 months before the

 

beginning of the tax year concerned.

 

(5)    

In a case where—

 

(a)    

the person mentioned in subsection (1)(a) is a company or

 

relevant undertaking, and

 

(b)    

at the end of the assessment period the person is a member of

 

a group,

 

    

the person is to be treated for the purposes of this section as not being

 

connected with any person that is a member of that group.

 

(6)    

In this section—

 

“turnover”, in relation to a person, means the amounts derived

 

from the provision of goods or services after the deduction of

 

trade discounts, value added tax and any other taxes based on

 

the amounts so derived, and

 

“relevant undertaking” has the meaning given by section 60D.

 

(7)    

For provision determining whether one person is connected with

 

another, see section 718 (connected persons).

 

(8)    

Expressions used in this section and in the Companies Act 2006 have

 

the same meaning in this section as in that Act.

 

60H    

Duty on client to state whether it qualifies as small for a tax year

 

(1)    

This section applies if, in the case of an engagement that meets

 

conditions (a) to (b) in section 49(1), the client receives from the

 

client’s agent or the worker a request to state whether in the client’s

 

opinion the client qualifies as small for a tax year specified in the

 

request.

 

(2)    

The client must provide to the person who made the request a

 

statement as to whether in the client’s opinion the client qualifies as

 

small for the tax year specified in the request.

 

(3)    

If the client fails to provide the statement by the time mentioned in

 

subsection (4) the duty to do so is enforceable by an injunction or, in

 

Scotland, by an order for specific performance under section 45 of the

 

Court of Session Act 1988.


 
 

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(4)    

The time is whichever is the later of—

 

(a)    

the end of the period of 45 days beginning with the date the

 

client receives the request, and

 

(b)    

the beginning of the period of 45 days ending with the start of

 

the tax year specified in the request.

 

(5)    

In this section “the client’s agent” means a person with whom the

 

client entered into a contract as part of the arrangements mentioned in

 

paragraph (b) of section 49(1).

 

When a person has a UK connection

 

60I    

When a person has a UK connection for a tax year

 

(1)    

For the purposes of this Chapter, a person has a UK connection for a

 

tax year if (and only if) immediately before the beginning of that tax

 

year the person—

 

(a)    

is resident in the United Kingdom, or

 

(b)    

has a permanent establishment in the United Kingdom.

 

(2)    

In this section “permanent establishment”—

 

(a)    

in relation to a company, is to be read (by virtue of section

 

1007A of ITA 2007) in accordance with Chapter 2 of Part 24

 

of CTA 2010, and

 

(b)    

in relation to any other person, is to be read in accordance with

 

that Chapter but as if references in that Chapter to a company

 

were references to that person.

 

Interpretation”

 

6          

In section 61(1) (interpretation), in the definition of company, before “means”

 

insert “(except in sections 60A to 60G)”.

 

Part 2

 

Amendments to Chapter 10 of Part 2 of ITEPA 2003

 

7          

Chapter 10 of Part 2 of ITEPA 2003 (workers’ services provided to public

 

sector through intermediaries) is amended as follows.

 

8          

For the heading of the Chapter substitute “Workers’ services provided through

 

intermediaries to public authorities or medium or large clients”.

 

9    (1)  

Section 61K (scope of Chapter) is amended as follows.

 

      (2)  

In subsection (1) for the words “to a public authority through an intermediary”

 

substitute “through an intermediary in a case where the services are provided

 

to a person who—

 

(a)    

is a public authority, or

 

(b)    

qualifies as medium or large and has a UK connection for a tax

 

year”.

 

      (3)  

After subsection (2) insert—

 

“(3)    

For the purposes of this Chapter a person qualifies as medium or large

 

for a tax year if the person does not qualify as small for the tax year for

 

the purposes of Chapter 8 of this Part (see sections 60A to 60G).

 

(4)    

Section 60I (when a person has a UK connection for a tax year) applies

 

for the purposes of this Chapter.”


 
 

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10         

In section 61L (meaning of “public authority”) in subsection (1)—

 

(a)    

after paragraph (a) insert—

 

“(aa)    

a body specified in section 23(3) of the Freedom of

 

Information Act 2000,”,

 

(b)    

omit the “or” at the end of paragraph (e), and

 

(c)    

after paragraph (f) insert “, or

 

(g)    

a company connected with any person mentioned in

 

paragraphs (a) to (f)”.

 

11  (1)  

Section 61M (engagements to which the Chapter applies) is amended as

 

follows.

 

      (2)  

In subsection (1)—

 

(a)    

omit paragraph (b),

 

(b)    

omit the “and” at the end of paragraph (c), and

 

(c)    

after paragraph (c) insert—

 

“(ca)    

the client—

 

(i)    

is a public authority, or

 

(ii)    

is a person who qualifies as medium or large

 

and has a UK connection for one or more tax

 

years during which the arrangements

 

mentioned in paragraph (c) have effect, and”.

 

      (3)  

After subsection (1) insert—

 

“(1A)    

But sections 61N to 61R do not apply if —

 

(a)    

the client is an individual, and

 

(b)    

the services are provided otherwise than for the purposes of

 

the client’s trade or business.”

 

12  (1)  

Section 61N (worker treated as receiving earnings from employment) is

 

amended as follows.

 

      (2)  

In subsection (3)—

 

(a)    

after “subsections (5) to (7)” insert “and (8A)”, and

 

(b)    

after “61T” insert “, 61TA”.

 

      (3)  

For subsection (5) substitute—

 

“(5)    

Unless and until the client gives a status determination statement to the

 

worker (see section 61NA), subsections (3) and (4) have effect as if for

 

any reference to the fee-payer there were substituted a reference to the

 

client; but this is subject to section 61V.

 

(5A)    

Subsections (6) and (7) apply, subject to sections 61T, 61TA and 61V,

 

if—

 

(a)    

the client has given a status determination statement to the

 

worker,

 

(b)    

the client is not the fee-payer, and

 

(c)    

the fee-payer is not a qualifying person.”

 

      (4)  

In subsection (8) (meaning of “qualifying person”) before paragraph (a)

 

insert—

 

“(za)    

has been given by the person immediately above them in the

 

chain the status determination statement given by the client to

 

the worker,”.


 
 

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      (5)  

After subsection (8) insert—

 

“(8A)    

If the client is not a public authority, a person is to be treated by

 

subsection (3) as making a deemed direct payment to the worker only

 

if the chain payment made by the person is made in a tax year for

 

which the client qualifies as medium or large and has a UK

 

connection.”

 

13         

After section 61N insert—

 

“61NA

Meaning of status determination statement

 

(1)    

For the purposes of section 61N “status determination statement”

 

means a statement by the client that—

 

(a)    

states that the client has concluded that the condition in

 

section 61M(1)(d) is met in the case of the engagement and

 

explains the reasons for that conclusion, or

 

(b)    

states (albeit incorrectly) that the client has concluded that the

 

condition in section 61M(1)(d) is not met in the case of the

 

engagement and explains the reasons for that conclusion.

 

(2)    

But a statement is not a status determination statement if the client fails

 

to take reasonable care in coming to the conclusion mentioned in it.

 

(3)    

For further provisions concerning status determination statements, see

 

section 61T (client-led status disagreement process) and section 61TA

 

(duty for client to withdraw status determination statement if it ceases

 

to be medium or large).”

 

14         

In section 61O(1) (conditions where intermediary is a company) for paragraph

 

(b) substitute—

 

“(b)    

it is the case that—

 

(i)    

the worker has a material interest in the intermediary,

 

(ii)    

the worker has received a chain payment from the

 

intermediary, or

 

(iii)    

the worker has rights which entitle, or which in any

 

circumstances would entitle, the worker to receive a

 

chain payment from the intermediary.”

 

15         

In section 61R (application of Income Tax Acts in relation to deemed

 

employment) omit subsection (7).

 

16         

For section 61T substitute—

 

“61T  

Client-led status disagreement process

 

(1)    

This section applies if, before the final chain payment is made in the

 

case of an engagement to which this Chapter applies, the worker or the

 

deemed employer makes representations to the client that the

 

conclusion contained in a status determination statement is incorrect.

 

(2)    

The client must either—

 

(a)    

give a statement to the worker or (as the case may be) the

 

deemed employer that—

 

(i)    

states that the client has considered the

 

representations and has decided that the conclusion

 

contained in the status determination statement is

 

correct, and

 

(ii)    

states the reasons for that decision, or


 
 

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(b)    

give a new status determination statement to the worker and

 

the deemed employer that—

 

(i)    

contains a different conclusion from the conclusion

 

contained in the previous status determination

 

statement,

 

(ii)    

states the date from which the client considers that the

 

conclusion contained in the new status determination

 

statement became correct, and

 

(iii)    

states that the previous status determination statement

 

is withdrawn.

 

(3)    

If the client fails to comply with the duty in subsection (2) before the

 

end of the period of 45 days beginning with the date the client receives

 

the representations, section 61N(3) and (4) has effect from the end of

 

that period until the duty is complied with as if for any reference to the

 

fee-payer there were substituted a reference to the client; but this is

 

subject to section 61V.

 

(4)    

A new status determination statement given to the deemed employer

 

under subsection (2)(b) is to be treated for the purposes of section

 

61N(8)(za) as having been given to the deemed employer by the

 

person immediately above the deemed employer in the chain.

 

(5)    

In this section—

 

“the deemed employer” means the person who, assuming one of

 

conditions A to C in section 61N were met, would be treated

 

as making a deemed direct payment to the worker under

 

section 61N(3) on the making of a chain payment;

 

“status determination statement” has the meaning given by

 

section 61NA.

 

61TA  

Duty for client to withdraw status determination statement if it ceases

 

to be medium or large

 

(1)    

This section applies if in the case of an engagement to which this

 

Chapter applies—

 

(a)    

the client is not a public authority,

 

(b)    

the client gives a status determination statement to the worker,

 

the client’s agent or both, and

 

(c)    

the client does not (but for this section) qualify as medium or

 

large for a tax year beginning after the status determination

 

statement is given.

 

(2)    

Before the beginning of the tax year the client must give a statement

 

to the relevant person, or (as the case may be) to both of the relevant

 

persons, stating—

 

(a)    

that the client does not qualify as medium or large for the tax

 

year, and

 

(b)    

that the status determination statement is withdrawn with

 

effect from the beginning of the tax year.


 
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Revised 20 May 2020