Finance Act 2000

18 (1) The following provisions apply in calculating for tax purposes the profits of a business carried on by a partnership that is treated as making in connection with that business a deemed Schedule E payment.

(2) The amount of the deduction allowed under paragraph 17 is limited to the amount that reduces the profits of the partnership for the tax year to nil.

(3) To the extent that in any tax year the expenses of the partnership in connection with the relevant engagements exceed the sum of—

(a) the amounts that would be deductible for the purposes of Schedule E if the worker had been employed by the client and the expenses had been incurred by the worker, and

(b) 5% of the amount taken into account in Step One of the calculation in paragraph 7 as the intermediary’s receipts in respect of the relevant engagements,

they shall be left out of account in calculating the profits of the business.