Part 2Employment income: charge to tax
F1CHAPTER 10Workers' services provided through intermediaries to public authorities or medium or large clients
61RApplication of Income Tax Acts in relation to deemed employment
(1)
The Income Tax Acts (in particular, Part 11 and PAYE regulations) apply in relation to the deemed direct payment as follows.
(2)
They apply as if—
(a)
the worker were employed by the person treated as making the deemed direct payment, and
(b)
the services were performed, or to be performed, by the worker in the course of performing the duties of that employment.
(3)
The deemed direct payment is treated in particular—
(a)
as taxable earnings from the employment for the purpose of securing that any deductions under Chapters 2 to 6 of Part 5 do not exceed the deemed direct payment, and
(b)
as taxable earnings from the employment for the purposes of section 232.
(4)
The worker is not chargeable to tax in respect of the deemed direct payment if, or to the extent that, by reason of any combination of the factors mentioned in subsection (5), the worker would not be chargeable to tax if—
(a)
the client employed the worker,
(b)
the worker performed the services in the course of that employment, and
(c)
the deemed direct payment were a payment by the client of earnings from that employment.
(5)
The factors are—
(a)
the worker being resident or domiciled outside the United Kingdom or meeting the requirement of section 26A,
(b)
the client being resident outside, or not resident in, the United Kingdom, and
(c)
the services being provided outside the United Kingdom.
(6)
Where the intermediary is a partnership or unincorporated association, the deemed direct payment is treated as received by the worker in the worker's personal capacity and not as income of the partnership or association.
F2(7)
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