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Income Tax (Earnings and Pensions) Bill


Income Tax (Earnings and Pensions) Bill
Part 2 — Employment income: charge to tax
Chapter 5 — Taxable earnings: rules applying to employee resident, ordinarily resident or domiciled outside UK

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 36    Election in respect of delayed remittances

     (1)    This section applies if—

           (a)           a person (“the claimant”) claims relief under section 35 for a tax year in

respect of delayed remittances from an employment, and

           (b)           at the end of that year the claimant had blocked earnings from that

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employment for one or more previous tax years.

     (2)    General earnings are “blocked earnings” for a tax year if they—

           (a)           were received in a country or territory outside the United Kingdom in

that year,

           (b)           could not be transferred by the claimant to the United Kingdom in that

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year because of any of the things mentioned in section 35(2)(c), and

           (c)           would have constituted taxable earnings from the employment in that

year under section 22(2) or 26(2) (general earnings which are taxable

earnings if remitted to UK) if they had been so transferred.

     (3)    The claimant may elect for the purposes of section 35(3)(b) to have the amount

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of the delayed remittances treated as taxable earnings from the employment in

one or more tax years specified in the election.

     (4)    A claimant may only specify a particular tax year if—

           (a)           there were blocked earnings of the claimant for that year from the

employment, and

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           (b)           it is a year prior to the tax year for which relief is claimed.

     (5)    If more than one year is specified, the election must indicate the amount which

is to be treated as taxable earnings in each of those years.

     (6)    However the amount of the delayed remittances which the claimant elects to

be treated as taxable earnings in a particular tax year must not exceed—

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            equation: plus[times[char[B],char[E]],minus[times[char[P],char[C]]]]

            where—

                    BE is the amount of blocked earnings of the claimant for that year from the

employment, and

                    PC is the amount of remittances treated as taxable earnings from the

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employment in that year as a result of a previous claim by the claimant

under section 35.

     (7)    An election under this section—

           (a)           must be made as part of the claim under section 35, and

           (b)           is irrevocable.

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     (8)    A person’s personal representatives may make any election under this section

which the person might have made.

 37    Claims for relief on delayed remittances

     (1)    A claim under section 35 must be made on or before the fifth anniversary of the

normal self-assessment filing date for the tax year for which relief is claimed.

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     (2)    All adjustments (by way of repayment of tax, assessment or otherwise) are to

be made which are necessary to give effect to section 35.

 

 

Income Tax (Earnings and Pensions) Bill
Part 2 — Employment income: charge to tax
Chapter 5 — Taxable earnings: rules applying to employee resident, ordinarily resident or domiciled outside UK

    20

 

     (3)    Those adjustments may be made at any time, despite anything to the contrary

in the Income Tax Acts.

     (4)    A person’s personal representatives may make any claim under section 35

which the person might have made.

     (5)    If a person dies—

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           (a)           any tax paid by the person and repayable because of a claim under

section 35 is to be repaid to the person’s personal representatives, and

           (b)           the person’s personal representatives are liable for any additional tax

which arises because of a claim under that section.

     (6)    Where subsection (5)(b) applies, the additional tax—

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           (a)           is to be assessed on the personal representatives, and

           (b)           is a debt due from and payable out of the estate.

Place of performance of duties of employment

 38    Earnings for period of absence from employment

     (1)    This section applies if a person ordinarily performs the whole or part of the

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duties of an employment in the United Kingdom.

     (2)    General earnings for a period of absence from the employment are to be treated

for the purposes of this Chapter as general earnings for duties performed in the

United Kingdom except in so far as they would, but for that absence, have been

general earnings for duties performed outside the United Kingdom.

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 39    Duties in UK merely incidental to duties outside UK

     (1)    This section applies if in a tax year an employment is in substance one whose

duties fall to be performed outside the United Kingdom.

     (2)    Duties of the employment performed in the United Kingdom whose

performance is merely incidental to the performance of duties outside the

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United Kingdom are to be treated for the purposes of this Chapter as

performed outside the United Kingdom.

     (3)    This section does not affect any question as to—

           (a)           where any duties are performed, or

           (b)           whether a person is absent from the United Kingdom,

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            for the purposes of section 378 (deduction from seafarers’ earnings: eligibility),

and section 383 (place of performance of incidental duties) applies instead.

 40    Duties on board vessel or aircraft

     (1)    Duties which a person performs on a vessel engaged on a voyage not

extending to a port outside the United Kingdom are to be treated for the

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purposes of this Chapter as performed in the United Kingdom.

     (2)    Duties which a person resident in the United Kingdom performs on a vessel or

aircraft engaged—

           (a)           on a voyage or journey beginning or ending in the United Kingdom, or

           (b)           on a part beginning or ending in the United Kingdom of any other

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voyage or journey,

 

 

Income Tax (Earnings and Pensions) Bill
Part 2 — Employment income: charge to tax
Chapter 5 — Taxable earnings: rules applying to employee resident, ordinarily resident or domiciled outside UK

    21

 

            are to be treated as performed in the United Kingdom for the purposes of this

Chapter.

     (3)    Subsection (2) does not, however, apply for the purposes of section 24(1)(b)

(limit on chargeable overseas earnings under section 23 where duties of

associated employment performed in UK) in relation to any duties of a

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person’s employment if—

           (a)            the employment is as a seafarer, and

           (b)            the duties are performed on a ship.

     (4)    Instead, any duties of the employment which are performed on a ship

engaged—

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           (a)           on a voyage beginning or ending outside the United Kingdom (but

excluding any part of it beginning and ending there), or

           (b)           on a part beginning or ending outside the United Kingdom of any other

voyage,

            are to be treated as performed outside the United Kingdom for the purposes of

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section 24(1)(b).

     (5)    For the purposes of subsections (3) and (4)—

           (a)           employment “as a seafarer” means an employment consisting of the

performance of duties on a ship or of such duties and others incidental

to them;

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           (b)           “ship” does not include—

                  (i)                 any offshore installation within the meaning of the Mineral

Workings (Offshore Installations) Act 1971 (c. 61), or

                  (ii)                what would be such an installation if the references in that Act

to controlled waters were to any waters;

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           (c)           the areas designated under section 1(7) of the Continental Shelf Act

1964 (c. 29) are treated as part of the United Kingdom.

 41    Employment in UK sector of continental shelf

     (1)    General earnings in respect of duties performed in the UK sector of the

continental shelf in connection with exploration or exploitation activities are to

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be treated for the purposes of this Chapter as general earnings in respect of

duties performed in the United Kingdom.

     (2)    In this section—

                    “the UK sector of the continental shelf” means the areas designated under

section 1(7) of the Continental Shelf Act 1964, and

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                    “exploration or exploitation activities” means activities carried on in

connection with the exploration or exploitation of so much of the

seabed and subsoil and their natural resources as is situated in the

United Kingdom or the UK sector of the continental shelf.

 

 

Income Tax (Earnings and Pensions) Bill
Part 2 — Employment income: charge to tax
Chapter 6 — Disputes as to domicile or ordinary residence

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Chapter 6

Disputes as to domicile or ordinary residence

 42    Board to determine dispute as to domicile or ordinary residence

     (1)    This section applies if, in connection with any of the provisions listed in

subsection (3), there is a dispute as to whether a person is or has been

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ordinarily resident or domiciled in the United Kingdom.

     (2)    The question whether the person is or has been so resident or domiciled is to

be referred to and decided by the Board of Inland Revenue.

     (3)    The provisions referred to in subsection (1) are—

                    section 15 (earnings for year when employee resident, ordinarily resident

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and domiciled in UK);

                    section 21 (earnings for year when employee resident and ordinarily

resident, but not domiciled, in UK, except chargeable overseas

earnings);

                    section 22 (chargeable overseas earnings for year when employee resident

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and ordinarily resident, but not domiciled, in UK);

                    section 23 (calculation of “chargeable overseas earnings”);

                    section 25 (UK-based earnings for year when employee resident, but not

ordinarily resident, in UK);

                    section 26 (foreign earnings for year when employee resident, but not

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ordinarily resident, in UK);

                    section 341 (deduction for travel expenses at start or finish of overseas

employment);

                    section 342 (deduction for travel expenses between employments where

duties performed abroad);

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                    section 355 (deduction for corresponding payments by non-domiciled

employees with foreign employers);

                    section 376 (deduction for foreign accommodation and subsistence costs

etc. where overseas employment);

                    section 390 (exception for payments to non-approved pension schemes if

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non-domiciled employees with foreign employers).

 43    Appeal against Board’s decision on domicile or ordinary residence

     (1)    A person who has been given notice of the Board’s decision on a question

under section 42 may, if aggrieved by that decision, appeal to the Special

Commissioners.

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     (2)    The notice of appeal must be given to the Board within 3 months after the date

on which the person is given notice of the Board’s decision.

 

 

Income Tax (Earnings and Pensions) Bill
Part 2 — Employment income: charge to tax
Chapter 7 — Application of provisions to agency workers

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Chapter 7

Application of provisions to agency workers

Agency workers

 44    Treatment of workers supplied by agencies

     (1)    This section applies if—

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           (a)           an individual (“the worker”) personally provides, or is under an

obligation personally to provide, services (which are not excluded

services) to another person (“the client”),

           (b)           the services are supplied by or through a third person (“the agency”)

under the terms of an agency contract,

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           (c)           the worker is subject to (or to the right of) supervision, direction or

control as to the manner in which the services are provided, and

           (d)           remuneration receivable under or in consequence of the agency

contract does not constitute employment income of the worker apart

from this Chapter.

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     (2)    If this section applies—

           (a)           the services which the worker provides, or is obliged to provide, to the

client under the agency contract are to be treated for income tax

purposes as duties of an employment held by the worker with the

agency, and

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           (b)           all remuneration receivable under or in consequence of the agency

contract (including remuneration which the client pays or provides in

relation to the services) is to be treated for income tax purposes as

earnings from that employment.

 45    Arrangements with agencies

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If—

           (a)           an individual (“the worker”), with a view to personally providing

services (which are not excluded services) to another person (“the

client”), enters into arrangements with a third person (“the agency”),

and

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           (b)           the arrangements are such that the services (if and when they are

provided) will be treated for income tax purposes under section 44 as

provided to the agency under an agency contract,

            any remuneration receivable under or in consequence of the arrangements is

to be treated for income tax purposes as earnings from an employment held by

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the worker with the agency.

 46    Cases involving unincorporated bodies etc.

     (1)    Section 44 also applies—

           (a)           if the worker personally provides, or is under an obligation to

personally provide, the services in question as a partner in a firm or a

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member of an unincorporated body, and

           (b)           if the agency in question is an unincorporated body of which the

worker is a member.

 

 

Income Tax (Earnings and Pensions) Bill
Part 2 — Employment income: charge to tax
Chapter 8 — Application of provisions to workers under arrangements made by intermediaries

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     (2)    In a case within subsection (1)(a), remuneration receivable under or in

consequence of the agency contract is to be treated for income tax purposes as

income of the worker and not as income of the firm or body.

Supplementary

 47    Interpretation of this Chapter

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     (1)    In this Chapter “agency contract” means a contract made between the worker

and the agency under the terms of which the worker is obliged to personally

provide services to the client.

     (2)    In this Chapter “excluded services” means—

           (a)           services as an actor, singer, musician or other entertainer or as a

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fashion, photographic or artist’s model, or

           (b)           services provided wholly—

                  (i)                 in the worker’s own home, or

                  (ii)                at other premises which are neither controlled or managed by

the client nor prescribed by the nature of the services.

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     (3)    For the purposes of this Chapter “remuneration”—

           (a)           does not include anything that would not have constituted

employment income of the worker if it had been receivable in

connection with an employment apart from this Chapter, but

           (b)           subject to paragraph (a), includes every form of payment, gratuity,

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profit and benefit.

Chapter 8

Application of provisions to workers under arrangements made by

intermediaries

Application of this Chapter

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 48    Scope of this Chapter

     (1)    This Chapter has effect with respect to the provision of services through an

intermediary.

     (2)    Nothing in this Chapter—

           (a)           affects the operation of Chapter 7 of this Part, or

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           (b)           applies to payments subject to deduction of tax under section 555 of

ICTA (payments to non-resident entertainers and sportsmen).

 49    Engagements to which this Chapter applies

     (1)    This Chapter applies where—

           (a)           an individual (“the worker”) personally performs, or is under an

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obligation personally to perform, services for the purposes of a

business carried on by another person (“the client”),

 

 

Income Tax (Earnings and Pensions) Bill
Part 2 — Employment income: charge to tax
Chapter 8 — Application of provisions to workers under arrangements made by intermediaries

    25

 

           (b)           the services are provided not under a contract directly between the

client and the worker but under arrangements involving a third party

(“the intermediary”), and

           (c)           the circumstances are such that, if the services were provided under a

contract directly between the client and the worker, the worker would

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be regarded for income tax purposes as an employee of the client.

     (2)    In subsection (1)(a) “business” includes any activity carried on—

           (a)           by a government or public or local authority (in the United Kingdom or

elsewhere), or

           (b)           by a body corporate, unincorporated body or partnership.

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     (3)    The reference in subsection (1)(b) to a “third party” includes a partnership or

unincorporated body of which the worker is a member.

     (4)    The circumstances referred to in subsection (1)(c) include the terms on which

the services are provided, having regard to the terms of the contracts forming

part of the arrangements under which the services are provided.

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     (5)    In this Chapter “engagement to which this Chapter applies” means any such

provision of services as is mentioned in subsection (1).

 50    Worker treated as receiving earnings from employment

     (1)    If, in the case of an engagement to which this Chapter applies, in any tax year—

           (a)           the conditions specified in section 51, 52 or 53 are met in relation to the

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intermediary, and

           (b)           the worker, or an associate of the worker—

                  (i)                 receives from the intermediary, directly or indirectly, a

payment or benefit that is not employment income, or

                  (ii)                has rights which entitle, or which in any circumstances would

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entitle, the worker or associate to receive from the intermediary,

directly or indirectly, any such payment or benefit,

                   the intermediary is treated as making to the worker, and the worker is treated

as receiving, in that year a payment which is to be treated as earnings from an

employment (“the deemed employment payment”).

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     (2)    A single payment is treated as made in respect of all engagements in relation

to which the intermediary is treated as making a payment to the worker in the

tax year.

     (3)    The deemed employment payment is treated as made at the end of the tax year,

unless section 57 applies (earlier date of deemed payment in certain cases).

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     (4)    In this Chapter “the relevant engagements”, in relation to a deemed

employment payment, means the engagements mentioned in subsection (2).

 51    Conditions of liability where intermediary is a company

     (1)    Where the intermediary is a company the conditions are that the intermediary

is not an associated company of the client that falls within subsection (2) and

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either—

           (a)           the worker has a material interest in the intermediary, or

           (b)           the payment or benefit mentioned in section 50(1)(b)—

 

 

 
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