Finance Bill (HL Bill 123)

continued    Part 2 continued    

for which the client qualifies as medium or large and has a UK
connection.”

13After section 61N insert—

“61NA Meaning of status determination statement

(1)5For 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)10states (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
15in 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).”

1420In 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
25intermediary, 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.”

15In section 61R (application of Income Tax Acts in relation to deemed
30employment) omit subsection (7).

16For 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
35the 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
40deemed 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)45states the reasons for that decision, or

(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
5statement,

(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
10statement 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
15reference 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
20the 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
  25under 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)30This 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)35the 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
40persons, 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.

(3)45If the client fails to comply with that duty the following rules apply
in relation to the engagement for the tax year—

(a)the client is to be treated as medium or large for the tax year,
and

(b)section 61N(3) and (4) have effect as if for any reference to the
fee-payer there were substituted a reference to the client.

(4)For the purposes of subsection (2)—

(a)the worker is a relevant person if the status determination
5statement was given to the worker, and

(b)the deemed employer is a relevant person if the status
determination statement was given to the client’s agent.

(5)In this section—

• “client’s agent” means a person with whom the client entered
  10into a contract as part of the arrangements mentioned in
  section 61M(1)(c);

• “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
  15under section 61N(3) on the making of a chain payment;

• “status determination statement” has the meaning given by
  section 61NA.”

17(1)Section 61W (prevention of double charge to tax and allowance of certain
deductions) is amended as follows.

(2)20In subsection (1)—

(a)in paragraph (b) for “a public authority” substitute “another person
(“the client”)”, and

(b)in paragraph (d) for “that public authority” substitute “the client”.

(3)In subsection (2)(b) for “public authority” substitute “client”.

25Part 3 Consequential and miscellaneous amendments

18In section 61D of ITEPA 2003 (managed service companies: worker treated
as receiving earnings from employment) for subsection (4A) substitute—

“(4A)This section does not apply where the provision of the relevant
30services gives rise (directly or indirectly) to an engagement to which
Chapter 10 applies and either—

(a)the client for the purposes of section 61M(1) is a public
authority, or

(b)the client for the purposes of section 61M(1)—

(i)35qualifies as medium or large for the tax year in which
the payment or benefit mentioned in subsection (1)(b)
is received, and

(ii)has a UK connection for the tax year in which the
payment or benefit mentioned in subsection (1)(b) is
40received.

(4B)Sections 60I (when a person has a UK connection for a tax year),
61K(3) (when a person qualifies as medium or large for a tax year)
and 61L (meaning of public authority) apply for the purposes of
subsection (4A).

(4C)It does not matter for the purposes of subsection (4A) whether the
client for the purposes of this Chapter is also “the client” for the
purposes of section 61M(1).”

19After section 688A of ITEPA 2003 insert—

“688AA 5 Workers’ services provided through intermediaries: recovery of
PAYE

(1)PAYE Regulations may make provision for, or in connection with,
the recovery of a deemed employer PAYE debt from a relevant
person.

(2)10“A deemed employer PAYE debt” means an amount—

(a)that a person (“the deemed employer”) is liable to pay under
PAYE regulations in consequence of being treated under
section 61N(3) as having made a deemed direct payment to a
worker, and

(b)15that an officer of Revenue and Customs considers there is no
realistic prospect of recovering from the deemed employer
within a reasonable period.

(3)“Relevant person”, in relation to a deemed employer PAYE debt,
means a person who is not the deemed employer and who—

(a)20is the highest person in the chain identified under section
61N(1) in determining that the deemed employer is to be
treated as having made the deemed direct payment, or

(b)is the second highest person in that chain and is a qualifying
person (within the meaning given by section 61N(8)) at the
25time the deemed employer is treated as having made that
deemed direct payment.”

20In section 60 of FA 2004 (construction industry scheme: meaning of contract
payments) after subsection (3) insert—

“(3A)This exception applies in so far as—

(a)30the payment can reasonably be taken to be for the services of
an individual, and

(b)the provision of those services gives rise to an engagement to
which Chapter 10 of Part 2 of ITEPA 2003 applies (workers’
services provided through intermediaries to public
35authorities or medium or large clients).

(3B)But the exception in subsection (3A) does not apply if, in the case of
the engagement mentioned in paragraph (b) of that subsection, the
client for the purposes of section 61M(1) of ITEPA 2003—

(a)is not a public authority, and

(b)40either—

(i)does not qualify as medium or large for the tax year in
which the payment concerned is made, or

(ii)does not have a UK connection for the tax year in
which the payment concerned is made.

(3C)45Sections 60I (when a person has a UK connection for a tax year),
61K(3) (when a person qualifies as medium or large for a tax year)

and 61L (meaning of public authority) of ITEPA 2003 apply for the
purposes of subsection (3B).”

21For the italic heading before section 141A of CTA 2009 substitute “Worker’s
services provided through intermediary to public authority or medium or
5large client”.

22In the heading of section 141A of CTA 2009 for “public sector” substitute
“public authority or medium or large client”.

23(1)Part 13 of CTA 2009 (additional relief for expenditure on research and
development) is amended as follows.

(2)10In section 1129 (qualifying expenditure on externally provided workers:
connected persons) after subsection (4) insert—

“(4A)In subsection (2) the reference to the staff provision payment is to
that payment before any deduction is made from the payment
under—

(a)15section 61S of ITEPA 2003,

(b)regulation 19 of the Social Security Contributions
(Intermediaries) Regulations 2000, or

(c)regulation 19 of the Social Security Contributions
(Intermediaries) (Northern Ireland) Regulations 2000.”

(3)20In section 1131 (qualifying expenditure on externally provided workers:
other cases) after subsection (2) insert—

“(3)In subsection (2) the reference to the staff provision payment is to
that payment before any deduction is made from the payment
under—

(a)25section 61S of ITEPA 2003,

(b)regulation 19 of the Social Security Contributions
(Intermediaries) Regulations 2000, or

(c)regulation 19 of the Social Security Contributions
(Intermediaries) (Northern Ireland) Regulations 2000.”

(4)30After section 1131 insert—

“1131A Sections 1129 and 1131: secondary Class 1 NICS paid by company

(1)This section applies if—

(a)a company makes a staff provision payment,

(b)the company is treated as making a payment of deemed
35direct earnings the amount of which is calculated by
reference to the amount of the staff provision payment, and

(c)the company pays a secondary Class 1 national insurance
contribution in respect of the payment of deemed direct
earnings.

(2)40In determining the company’s qualifying expenditure on externally
provided workers in accordance with section 1129(2) or section
1131(2) the amount of the staff payment provision is to be treated as
increased by the amount of the contribution.

(3)In determining the company’s qualifying expenditure on externally
45provided workers in accordance with section 1129(2) the aggregate

of the relevant expenditure of each staff controller is to be treated as
increased by the amount of the contribution.

(4)But subsection (2) does not apply to the extent that the expenditure
incurred by the company in paying the contribution is met directly
5or indirectly by a staff controller.

(5)“A payment of deemed direct earning” means a payment the
company is treated as making by reason of regulation 14 of the Social
Security Contributions (Intermediaries) Regulations 2000 or
regulation 14 of the Social Security Contributions (Intermediaries)
10(Northern Ireland) Regulations 2000.”

Part 4 Commencement and transitional provisions

Commencement

24The amendments made by Part 1 of this Schedule have effect for the tax year
152021-22 and subsequent tax years.

25The amendments made by Part 2 of this Schedule have effect in relation to
deemed direct payments treated as made on or after 6 April 2021.

26The amendment made by paragraph 18 of this Schedule has effect for the
purposes of determining whether section 61D of ITEPA 2003 applies in a
20case where the payment or benefit mentioned in subsection (1)(b) of that
section is received on or after 6 April 2021.

27The amendment made by paragraph 20 of this Schedule has effect in relation
to payments made under a construction contract on or after 6 April 2021.

28The amendments made by paragraph 23 of this Schedule have effect in
25relation to expenditure incurred on or after 6 April 2021.

29Sections 101 to 103 of FA 2009 (interest) come into force on 6 April 2021 in
relation to amounts payable or paid to Her Majesty’s Revenue and Customs
under regulations made by virtue of section 688AA of ITEPA 2003 (as
inserted by paragraph 19 of this Schedule).

30Transitional provisions

30(1)This paragraph applies where—

(a)the client in the case of an engagement to which Chapter 10 of Part 2
of ITEPA 2003 applies is not a public authority within the meaning
given by section 61L of ITEPA 2003 (as that section had effect before
35the amendments made by paragraph 10 of this Schedule), and

(b)a chain payment is made on or after 6 April 2021 that can reasonably
be taken to be for services performed by the worker before 6 April
2021.

(2)The chain payment is to be disregarded for the purposes of Chapter 10 of
40Part 2 of ITEPA 2003.

31(1)This paragraph applies where—

(a)the client in the case of an engagement to which Chapter 10 of Part 2
of ITEPA 2003 applies is not a public authority within the meaning

given by section 61L of ITEPA 2003 (as that section had effect before
the amendments made by paragraph 10 of this Schedule), and

(b)one or more qualifying chain payments are made in the tax year
2021-22 or a subsequent tax year (“the tax year concerned”) to the
5intermediary.

(2)A chain payment made to the intermediary is a qualifying chain payment if
it can reasonably be taken to be for services performed by the worker before
6 April 2021.

(3)A chain payment made to the intermediary is also a qualifying chain
10payment if—

(a)another chain payment (“the earlier payment”) was made before 6
April 2021 to a person other than the intermediary,

(b)the earlier payment can reasonably be taken to be for the same
services as the chain payment made to the intermediary, and

(c)15the person who made the earlier payment would, but for paragraph
25 of this Schedule, have been treated by section 61N(3) and (4) of
ITEPA 2003 as making a deemed direct payment to the worker at the
same time as they made the earlier payment.

(4)Chapter 8 of Part 2 of ITEPA 2003 applies in relation to the engagement for
20the tax year concerned (in addition to Chapter 10 of Part 2 of ITEPA 2003),
but as if—

(a)the amendments made by Part 1 of this Schedule had not been made,
and

(b)the qualifying chain payments received by the intermediary in the
25tax year concerned are the only payments and benefits received by
the intermediary in that year in respect of the engagement.

32(1)This paragraph applies for the purposes of paragraphs 30 and 31 where a
chain payment (“the actual payment”) is made that can reasonably be taken
to be for services of the worker performed during a period that begins before
30and ends on or after 6 April 2021.

(2)The actual payment is to be treated as two separate chain payments—

(a)one consisting of so much of the amount or value of the actual
payment as can on a just and reasonable apportionment be taken to
be for services performed before 6 April 2021, and

(b)35another consisting of so much of the amount or value of the actual
payment as can on a just and reasonable apportionment be taken to
be for services performed on or after 6 April 2021.

33For the purposes of section 61N(5), (5A)(a) and (8)(za) of ITEPA 2003 it does
not matter whether the status determination statement concerned is given
40before 6 April 2021 or on or after that date.

34For the purposes of section 61T of ITEPA 2003—

(a)it does not matter whether the representations to the client
mentioned in subsection (1) of that section were made before 6 April
2021 or on or after that date, but

(b)45in a case where the representations were made before 6 April 2021
that section has effect as if the reference in subsection (3) to the date
the client receives the representations were to 6 April 2021.

Sections 15 and 16

Schedule 2 The loan charge: consequential amendments

Part 1 Amendments to F(No.2)A 2017 in consequence of section 15

15Schedule 11 to F(No.2)A 2017 (employment income provided through third
parties: loans etc outstanding on 5 April 2019) is amended as follows.

2In paragraph 1 (application of Part 7A of ITEPA 2003: relevant step) in sub-
paragraph (2) for the words from “before” to the end substitute “before the
end of 5 April 2019.”

310For the italic heading before paragraph 2 substitute “Meaning of “loan” and
“quasi loan””.

4In paragraph 2 (meaning of “loan”, “quasi-loan” and “approved repayment
date”) omit sub-paragraph (6).

5(1)Paragraph 4 (when an amount of a loan is outstanding: certain repayments
15to be disregarded) is amended as follows.

(2)In sub-paragraph (1)(b)(ii) for “the relevant date” substitute “5 April 2019”.

(3)In sub-paragraph (2) for “the relevant date” substitute “5 April 2019”.

(4)Omit sub-paragraph (4).

6In paragraph 5 (meaning of “outstanding”: loans where A or B acquires a
20right to payment of the loan) in sub-paragraph (1)(b) for “6 April 1999”
substitute “9 December 2010”.

7In paragraph 13 (meaning of “outstanding”: quasi-loans where A or B
acquires a right to the payment or transfer of assets) in sub-paragraph (1)(b)
for “6 April 1999” substitute “9 December 2010”.

825Omit paragraph 19 (meaning of “approved fixed term loan”) and the italic
heading before that paragraph.

9For the heading of Part 2 substitute “Accelerated payments”.

10Omit paragraphs 20 to 22 and the italic headings before each of those
paragraphs.

1130Omit the italic heading before paragraph 23.

12(1)Paragraph 23 (accelerated payments) is amended as follows.

(2)In sub-paragraph (1)—

(a)in paragraph (d) for “the relevant date” substitute “5 April 2019”, and

(b)in paragraph (e) for “the relevant date” substitute “5 April 2019”.

(3)35Omit sub-paragraph (4).

13(1)Paragraph 35A (when the duty to provide loan charge information arises) is
amended as follows.

(2)Omit sub-paragraph (3).

(3)In sub-paragraph (4) in the words before paragraph (a) for “third” substitute
“second”.

(4)In sub-paragraph (5)—

(a)in the words before paragraph (a) for “fourth” substitute “third”,

(b)5in paragraph (a) for the words from the beginning to “conditions”
substitute “neither the first nor the second condition”, and

(c)in paragraph (b)—

(i)for “and (2)(b)” substitute “and (2)”, and

(ii)omit the words from “(and if paragraph” to “omitted)”.

(5)10In sub-paragraph (6) in the words before paragraph (a) for “fourth”
substitute “third”.

(6)In sub-paragraph (7) omit paragraph (b).

14In paragraph 35B (duty of appropriate third party to provide information to
A) in sub-paragraph (1) omit “Q,”.

15(1)15Paragraph 35D (meaning of “loan charge information”) is amended as
follows.

(2)In sub-paragraph (1)—

(a)in paragraph (e) omit “, or the loan mentioned in paragraph
35A(3)(a),”,

(b)20in paragraph (j) omit “, Q”, and

(c)in paragraph (k) omit “, or in a case within paragraph 35A(3)(a),”.

(3)In sub-paragraph (2) omit paragraph (a).

16(1)Paragraph 36 (duty to provide loan charge information to B) is amended as
follows.

(2)25In sub-paragraph (1)(b) for “6 April 1999” substitute “9 December 2010”.

(3)In sub-paragraph (2) for the words from “the period” to the end substitute
“15 April 2019”.

(4)Omit sub-paragraph (4).

17Schedule 12 to F(No.2)A 2017 (trading income provided through third
30parties: loans etc outstanding on 5 April 2019) is amended as follows.

18For the italic heading before paragraph 2 substitute “Meaning of “loan” and
“quasi loan””.

19In paragraph 2 (meaning of “loan”, “quasi-loan” and “approved repayment
date”) omit sub-paragraph (6).

2035Omit paragraphs 15 to 18 and the italic heading before each of those
paragraphs.

21(1)Paragraph 19 (accelerated payments: application of paragraph 20) is
amended as follows.

(2)In sub-paragraph (1)—

(a)40in paragraph (e) for “the relevant date” substitute “5 April 2019”, and

(b)in paragraph (f) for “the relevant date” substitute “5 April 2019”.

(3)Omit sub-paragraph (3).

22In paragraph 23 (meaning of “loan charge information”) in sub-paragraph
(2) omit paragraph (a).

Part 2 5Amendments in consequence of section 16

ITEPA 2003

23ITEPA 2003 is amended as follows.

24(1)Section 554A (application of Chapter 2 of Part 7A: the main case) is amended
as follows.

(2)10In subsection (2) after “paragraph 1” insert “or 1A”.

(3)For subsection (4) substitute—

“(4)Chapter 2 does not apply by reason of—

(a)a relevant step taken on or after A’s death if—

(i)the relevant step is within section 554B, or

(ii)15the relevant step is within section 554C by virtue of
subsection (1)(ab) of that section,

(b)a relevant step within paragraph 1 of Schedule 11 to F(No.2)A
2017 which is treated as being taken on or after A’s death, or

(c)a relevant step within paragraph 1A of Schedule 11 to
20F(No.2)A 2017 in a case where the initial step (within the
meaning given by sub-paragraph (1)(a) of that paragraph) is
treated as being taken on or after A’s death.”

25In section 554Z (interpretation: general) in subsection (10)(d) after
“paragraph 1” insert “or 1A”.

25F(No.2)A 2017

26Schedule 11 to F(No.2)A 2017 (employment income provided through third
parties: loans etc outstanding on 5 April 2019) is amended as follows.

27In paragraph 2 (meaning of “loan”, “quasi-loan” and “approved repayment
date”)—

(a)30in sub-paragraph (2), in the words before paragraph (a), for
“paragraph 1” substitute “paragraphs 1 and 1A”,

(b)in sub-paragraph (4) for “paragraph 1” substitute “paragraphs 1 and
1A”, and

(c)in sub-paragraph (5) for “paragraph 1” substitute “paragraphs 1 and
351A”.

28In paragraph 3(1) (meaning of “outstanding”: loans) for “paragraph 1”
substitute “paragraphs 1 and 1A”.

29In paragraph 4 (when an amount of a loan is outstanding: certain
repayments to be disregarded) in sub-paragraph (6) for “the relevant step
40treated as taken by paragraph 1” substitute “a relevant step treated as taken
by paragraph 1 or 1A”.