Income Tax (Earnings and Pensions) Act 2003

[F1 61N Worker treated as receiving earnings from employment U.K.

(1) If one of Conditions A to C is met, identify the chain of two or more persons where—

(a) the highest person in the chain is the client,

(b) the lowest person in the chain is the intermediary, and

(c) each person in the chain above the lowest makes a chain payment to the person immediately below them in the chain.

(See section 61U for cases where one of Conditions A to C is treated as being met.)

(2) In this section and sections 61O to 61S—

• “chain payment” means a payment, or money's worth or any other benefit, that can reasonably be taken to be for the worker's services to the client,

• “make”—

  (a)

  in relation to a chain payment that is money's worth, means transfer, and

  (b)

  in relation to a chain payment that is a benefit other than a payment or money's worth, means provide, and

• “the fee-payer” means the person in the chain immediately above the lowest.

(3) The fee-payer is treated as making to the worker, and the worker is treated as receiving, a payment which is to be treated as earnings from an employment (“the deemed direct payment”), but this is subject to subsections (5) to (7) [F2 and (8A)] and sections 61T [F3 , 61TA] [F4 , 61V and 61WA].

(4) The deemed direct payment is treated as made at the same time as the chain payment made by the fee-payer.

[F5 (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 [F6 sections 61V and 61WA].

(5A) Subsections (6) and (7) apply, subject to sections 61T, 61TA [F7 , 61V and 61WA], 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.]

(6) If there is no person in the chain below the highest and above the lowest who is a qualifying person, subsections (3) and (4) have effect as if for any reference to the fee-payer there were substituted a reference to the client.

(7) Otherwise, subsections (3) and (4) have effect as if for any reference to the fee-payer there were substituted a reference to the person in the chain who—

(a) is above the lowest,

(b) is a qualifying person, and

(c) is lower in the chain than any other person in the chain who—

(i) is above the lowest, and

(ii) is a qualifying person.

(8) In subsections (5) to (7) a “qualifying person” is a person who—

[F8 (za) has been given by the person immediately above them in the chain the status determination statement given by the client to the worker,]

(a) is resident in the United Kingdom or has a place of business in the United Kingdom,

(b) is not a person who is controlled by—

(i) the worker, alone or with one or more associates of the worker, or

(ii) an associate of the worker, with or without other associates of the worker, and

(c) if a company, is not one in which—

(i) the worker, alone or with one or more associates of the worker, or

(ii) an associate of the worker, with or without other associates of the worker,

has a material interest (within the meaning given by section 51(4) and (5)).

[F9 (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.]

(9) Condition A is that—

(a) the intermediary is a company, and

(b) the conditions in section 61O are met in relation to the intermediary.

(10) Condition B is that—

(a) the intermediary is a partnership,

(b) the worker is a member of the partnership,

(c) the provision of the services is by the worker as a member of the partnership, and

(d) the condition in section 61P is met in relation to the intermediary.

(11) Condition C is that the intermediary is an individual.

(12) Where a payment, money's worth or any other benefit can reasonably be taken to be for both—

(a) the worker's services to the client, and

(b) anything else,

then, for the purposes of this Chapter, so much of it as can, on a just and reasonable apportionment, be taken to be for the worker's services is to be treated as (and the rest is to be treated as not being) a payment, or money's worth or another benefit, that can reasonably be taken to be for the worker's services.]

Textual Amendments

F1 Pt. 2 Ch. 10 inserted (with effect in accordance with Sch. 1 para. 16 of the amending Act) by Finance Act 2017 (c. 10), Sch. 1 para. 9

F2 Words in s. 61N(3) inserted (with effect in accordance with Sch. 1 para. 25 of the amending Act) by Finance Act 2020 (c. 14), Sch. 1 para. 12(2)(a) (with Sch. 1 paras. 30-34)

F3 Word in s. 61N(3) inserted (with effect in accordance with Sch. 1 para. 25 of the amending Act) by Finance Act 2020 (c. 14), Sch. 1 para. 12(2)(b) (with Sch. 1 paras. 30-34)

F4 Words in s. 61N(3) substituted (with effect in accordance with s. 21(10) of the amending Act) by Finance Act 2021 (c. 26), s. 21(2)(a)

F5 S. 61N(5)(5A) substituted for s. 61N(5) (with effect in accordance with Sch. 1 para. 25 of the amending Act) by Finance Act 2020 (c. 14), Sch. 1 para. 12(3) (with Sch. 1 paras. 30-34)

F6 Words in s. 61N(5) substituted (with effect in accordance with s. 21(10) of the amending Act) by Finance Act 2021 (c. 26), s. 21(2)(b)

F7 Words in s. 61N(5A) substituted (with effect in accordance with s. 21(10) of the amending Act) by Finance Act 2021 (c. 26), s. 21(2)(c)

F8 S. 61N(8)(za) inserted (with effect in accordance with Sch. 1 para. 25 of the amending Act) by Finance Act 2020 (c. 14), Sch. 1 para. 12(4) (with Sch. 1 paras. 30-34)

F9 S. 61N(8A) inserted (with effect in accordance with Sch. 1 para. 25 of the amending Act) by Finance Act 2020 (c. 14), Sch. 1 para. 12(5) (with Sch. 1 paras. 30-34)