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(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 | |
voyage or journey, | |
are to be treated as performed in the United Kingdom for the purposes of this | |
Chapter. | 5 |
(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 | |
person’s employment if— | |
(a) the employment is as a seafarer, and | 10 |
(b) the duties are performed on a ship. | |
(4) Instead, any duties of the employment which are performed on a ship | |
engaged— | |
(a) on a voyage beginning or ending outside the United Kingdom (but | |
excluding any part of it beginning and ending there), or | 15 |
(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 | |
section 24(1)(b). | |
(5) For the purposes of subsections (3) and (4)— | 20 |
(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; | |
(b) “ship” does not include— | |
(i) any offshore installation within the meaning of the Mineral | 25 |
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; | |
(c) the areas designated under section 1(7) of the Continental Shelf Act | |
1964 (c. 29) are treated as part of the United Kingdom. | 30 |
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 | |
be treated for the purposes of this Chapter as general earnings in respect of | |
duties performed in the United Kingdom. | 35 |
(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 | |
“exploration or exploitation activities” means activities carried on in | |
connection with the exploration or exploitation of so much of the | 40 |
seabed and subsoil and their natural resources as is situated in the | |
United Kingdom or the UK sector of the continental shelf. | |
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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 | 5 |
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 | 10 |
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 | 15 |
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 | 20 |
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); | 25 |
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 | 30 |
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. | 35 |
(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. | |
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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— | 5 |
(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, | 10 |
(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. | 15 |
(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 | 20 |
(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 | 25 |
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 | 30 |
(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 | |
duties of an employment held by the worker with the agency, | |
any remuneration receivable under or in consequence of the arrangements is | |
to be treated for income tax purposes as earnings from that employment. | 35 |
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 | |
member of an unincorporated body, and | 40 |
(b) if the agency in question is an unincorporated body of which the | |
worker is a member. | |
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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 | 5 |
(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 | 10 |
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. | 15 |
(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, | 20 |
profit and benefit. | |
Chapter 8 | |
Application of provisions to workers under arrangements made by | |
intermediaries | |
Application of this Chapter | 25 |
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 | 30 |
(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 | 35 |
obligation personally to perform, services for the purposes of a | |
business carried on by another person (“the client”), | |
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(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 | 5 |
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. | 10 |
(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. | 15 |
(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 | 20 |
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 | 25 |
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”). | 30 |
(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). | 35 |
(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 | 40 |
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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| |
(i) is received or receivable by the worker directly from the | |
intermediary, and | |
(ii) can reasonably be taken to represent remuneration for services | |
provided by the worker to the client. | |
(2) An associated company of the client falls within this subsection if it is such a | 5 |
company by reason of the intermediary and the client being under the | |
control— | |
(a) of the worker, or | |
(b) of the worker and other persons. | |
(3) A worker is treated as having a material interest in a company if— | 10 |
(a) the worker, alone or with one or more associates of the worker, or | |
(b) an associate of the worker, with or without other such associates, | |
has a material interest in the company. | |
(4) For this purpose a material interest means— | |
(a) beneficial ownership of, or the ability to control, directly or through the | 15 |
medium of other companies or by any other indirect means, more than | |
5% of the ordinary share capital of the company; or | |
(b) possession of, or entitlement to acquire, rights entitling the holder to | |
receive more than 5% of any distributions that may be made by the | |
company; or | 20 |
(c) where the company is a close company, possession of, or entitlement to | |
acquire, rights that would in the event of the winding up of the | |
company, or in any other circumstances, entitle the holder to receive | |
more than 5% of the assets that would then be available for distribution | |
among the participators. | 25 |
(5) In subsection (4)(c) “participator” has the meaning given by section 417(1) of | |
ICTA. | |
52 Conditions of liability where intermediary is a partnership | |
(1) Where the intermediary is a partnership the conditions are as follows. | |
(2) In relation to any payment or benefit received or receivable by the worker as a | 30 |
member of the partnership the conditions are— | |
(a) that the worker, alone or with one or more relatives, is entitled to 60% | |
or more of the profits of the partnership; or | |
(b) that most of the profits of the partnership concerned derive from the | |
provision of services under engagements to which this Chapter | 35 |
applies— | |
(i) to a single client, or | |
(ii) to a single client together with associates of that client; or | |
(c) that under the profit sharing arrangements the income of any of the | |
partners is based on the amount of income generated by that partner by | 40 |
the provision of services under engagements to which this Chapter | |
applies. | |
In paragraph (a) “relative” means husband or wife, parent or child or remoter | |
relation in the direct line, or brother or sister. | |
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(3) In relation to any payment or benefit received or receivable by the worker | |
otherwise than as a member of the partnership, the conditions are that the | |
payment or benefit— | |
(a) is received or receivable by the worker directly from the intermediary, | |
and | 5 |
(b) can reasonably be taken to represent remuneration for services | |
provided by the worker to the client. | |
53 Conditions of liability where intermediary is an individual | |
Where the intermediary is an individual the conditions are that the payment or | |
benefit— | 10 |
(a) is received or receivable by the worker directly from the intermediary, | |
and | |
(b) can reasonably be taken to represent remuneration for services | |
provided by the worker to the client. | |
The deemed employment payment | 15 |
54 Calculation of deemed employment payment | |
(1) The amount of the deemed employment payment for a tax year (“the year”) is | |
the amount resulting from the following steps: | |
| |
Step 1 | 20 |
Find (applying section 55) the total amount of all payments and benefits | |
received by the intermediary in the year in respect of the relevant | |
engagements, and reduce that amount by 5%. | |
| |
Step 2 | 25 |
Add (applying that section) the amount of any payments and benefits received | |
by the worker in the year in respect of the relevant engagements, otherwise | |
than from the intermediary, that— | |
(a) are not chargeable to income tax as employment income, and | |
(b) would be so chargeable if the worker were employed by the client. | 30 |
| |
Step 3 | |
Deduct (applying Chapters 1 to 5 of Part 5) the amount of any expenses met in | |
the year by the intermediary that would have been deductible from the taxable | |
earnings from the employment if— | 35 |
(a) the worker had been employed by the client, and | |
(b) the expenses had been met by the worker out of those earnings. | |
| |
If the result at this or any later point is nil or a negative amount, there is no | |
deemed employment payment. | 40 |
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Step 4 | |
Deduct the amount of any capital allowances in respect of expenditure | |
incurred by the intermediary that could have been deducted from employment | |
income under section 262 of CAA 2001 (employments and offices) if the worker | 45 |
had been employed by the client and had incurred the expenditure. | |
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