When a person qualifies as small for a tax year

60AWhen a company qualifies as small for a tax year

1

For the purposes of this Chapter, a company qualifies as small for a tax year if one of the following conditions is met (but this is subject to section 60C).

2

The first condition is that the company's first financial year is not relevant to the tax year.

3

The second condition is that the small companies regime applies to the company for its last financial year that is relevant to the tax year.

4

For the purposes of this section, a financial year of a company is “relevant to” a tax year if the period for filing the company's accounts and reports for the financial year ends before the beginning of the tax year.

5

Expressions used in this section and in the Companies Act 2006 have the same meaning in this section as in that Act.

60BWhen a company qualifies as small for a tax year: joint ventures

1

This section applies when determining for the purposes of section 60A(3) whether the small companies regime applies to a company for a financial year in a case where—

a

at the end of the financial year the company is jointly controlled by two or more other persons, and

b

one or more of those other persons are undertakings (“the joint venturer undertakings”).

2

If the company is a parent company, the joint venturer undertakings are to be treated as members of the group headed by the company.

3

If the company is not a parent company, the company and the joint venturer undertakings are to be treated as constituting a group of which the company is the parent company.

4

In this section the expression “jointly controlled” is to be read in accordance with those provisions of international accounting standards which relate to joint ventures.

5

Expressions used in this section and in the Companies Act 2006 have the same meaning in this section as in that Act.

60CWhen a company qualifies as small for a tax year: subsidiaries

1

A company does not qualify as small for a tax year by reason of the condition in section 60A(3) being met if—

a

the company is a member of a group at the end of its last financial year that is relevant to the tax year,

b

the company is not the parent undertaking of that group at the end of that financial year, and

c

the undertaking that is the parent undertaking of that group at that time does not qualify as small in relation to its last financial year that is relevant to the tax year.

2

Where the parent undertaking mentioned in subsection (1)(c) is not a company, sections 382 and 383 of the Companies Act 2006 have effect for determining whether the parent undertaking qualifies as small in relation to its last financial year that is relevant to the tax year as if references in those sections to a company and a parent company included references to an undertaking and a parent undertaking.

3

For the purposes of subsections (1)(c) and (2) a financial year of an undertaking that is not a company is “relevant to” a tax year if it ends at least 9 months before the beginning of the tax year.

4

For the purposes of this section, a financial year of a company is “relevant to” a tax year if the period for filing the company's accounts and reports for the financial year ends before the beginning of the tax year.

5

Expressions used in this section and in the Companies Act 2006 have the same meaning in this section as in that Act.

60DWhen a relevant undertaking qualifies as small for a tax year

1

Sections 60A to 60C apply in relation to a relevant undertaking as they apply in relation to a company, subject to any necessary modifications.

2

In this section “relevant undertaking” means an undertaking in respect of which regulations have effect under—

a

section 15(a) of the Limited Liability Partnerships Act 2000,

b

section 1043 of the Companies Act 2006 (unregistered companies), or

c

section 1049 of the Companies Act 2006 (overseas companies).

3

Expressions used in this section and in the Companies Act 2006 have the same meaning in this section as in that Act.

60EWhen other undertakings qualify as small for a tax year

1

An undertaking that is not a company or a relevant undertaking qualifies as small for a tax year if one of the following conditions is met.

2

The first condition is that the undertaking's first financial year is not relevant to the tax year.

3

The second condition is that the undertaking's turnover for its last financial year that is relevant to the tax year is not more than the amount for the time being specified in the second column of item 1 of the Table in section 382(3) of the Companies Act 2006.

4

For the purposes of this section a financial year of an undertaking is “relevant to” a tax year if it ends at least 9 months before the beginning of the tax year.

5

In this section—

• “relevant undertaking” has the meaning given by section 60D, and

• “turnover”, in relation to an undertaking, means the amounts derived from the provision of goods or services after the deduction of trade discounts, value added tax and any other taxes based on the amounts so derived.

6

Expressions used in this section and in the Companies Act 2006 have the same meaning in this section as in that Act.

60FWhen other persons qualify as small for a tax year

1

For the purposes of this Chapter, a person who is not a company, relevant undertaking or other undertaking qualifies as small for a tax year if the person's turnover for the last calendar year before the tax year is not more than the amount for the time being specified in the second column of item 1 of the Table in section 382(3) of the Companies Act 2006.

2

In this section—

• “company” and “undertaking” have the same meaning as in the Companies Act 2006,

• “relevant undertaking” has the meaning given by section 60D, and

• “turnover”, in relation to a person, means the amounts derived from the provision of goods or services after the deduction of trade discounts, value added tax and any other taxes based on the amounts so derived.

60GSections 60A to 60F: connected persons

1

This section applies where—

a

it is necessary for the purposes of determining whether a person qualifies as small for a tax year (“the tax year concerned”) to first determine the person's turnover for a financial year or calendar year (“the assessment year”), and

b

at the end of the assessment year the person is connected with one or more other persons (“the connected persons”).

2

For the purposes of determining whether the person qualifies as small for the tax year concerned the person's turnover for the assessment year is to be taken to be the sum of—

a

the person's turnover for the assessment year, and

b

the relevant turnover of each of the connected persons.

3

In subsection (2)(b) “the relevant turnover” of a connected person means—

a

in a case where the connected person is a company, relevant undertaking or other undertaking, its turnover for its last financial year that is relevant to the tax year concerned, and

b

in a case where the connected person is not a company, relevant undertaking or other undertaking, the turnover of the connected person for the last calendar year ending before the tax year concerned.

4

For the purposes of subsection (3)(a)—

a

a financial year of a company or relevant undertaking is relevant to the tax year concerned if the period for filing accounts and reports for the financial year ends before the beginning of the tax year concerned, and

b

a financial year of any other undertaking is relevant to the tax year concerned if it ends more than 9 months before the beginning of the tax year concerned.

5

In a case where—

a

the person mentioned in subsection (1)(a) is a company or relevant undertaking, and

b

at the end of the assessment period the person is a member of a group,

the person is to be treated for the purposes of this section as not being connected with any person that is a member of that group.

6

In this section—

• “turnover”, in relation to a person, means the amounts derived from the provision of goods or services after the deduction of trade discounts, value added tax and any other taxes based on the amounts so derived, and

• “relevant undertaking” has the meaning given by section 60D.

7

For provision determining whether one person is connected with another, see section 718 (connected persons).

8

Expressions used in this section and in the Companies Act 2006 have the same meaning in this section as in that Act.

60HDuty on client to state whether it qualifies as small for a tax year

1

This section applies if, in the case of an engagement that meets conditions (a) to (b) in section 49(1), the client receives from the client's agent or the worker a request to state whether in the client's opinion the client qualifies as small for a tax year specified in the request.

2

The client must provide to the person who made the request a statement as to whether in the client's opinion the client qualifies as small for the tax year specified in the request.

3

If the client fails to provide the statement by the time mentioned in subsection (4) the duty to do so is enforceable by an injunction or, in Scotland, by an order for specific performance under section 45 of the Court of Session Act 1988.

4

The time is whichever is the later of—

a

the end of the period of 45 days beginning with the date the client receives the request, and

b

the beginning of the period of 45 days ending with the start of the tax year specified in the request.

5

In this section “the client's agent” means a person with whom the client entered into a contract as part of the arrangements mentioned in paragraph (b) of section 49(1).

When a person has a UK connection

60IWhen a person has a UK connection for a tax year

1

For the purposes of this Chapter, a person has a UK connection for a tax year if (and only if) immediately before the beginning of that tax year the person—

a

is resident in the United Kingdom, or

b

has a permanent establishment in the United Kingdom.

2

In this section “permanent establishment”—

a

in relation to a company, is to be read (by virtue of section 1007A of ITA 2007) in accordance with Chapter 2 of Part 24 of CTA 2010, and

b

in relation to any other person, is to be read in accordance with that Chapter but as if references in that Chapter to a company were references to that person.

Interpretation

61NAMeaning of status determination statement

1

For the purposes of section 61N “status determination statement” means a statement by the client that—

a

states that the client has concluded that the condition in section 61M(1)(d) is met in the case of the engagement and explains the reasons for that conclusion, or

b

states (albeit incorrectly) that the client has concluded that the condition in section 61M(1)(d) is not met in the case of the engagement and explains the reasons for that conclusion.

2

But a statement is not a status determination statement if the client fails to take reasonable care in coming to the conclusion mentioned in it.

3

For further provisions concerning status determination statements, see section 61T (client-led status disagreement process) and section 61TA (duty for client to withdraw status determination statement if it ceases to be medium or large).

b

it is the case that—

i

the worker has a material interest in the intermediary,

ii

the worker has received a chain payment from the intermediary, or

iii

the worker has rights which entitle, or which in any circumstances would entitle, the worker to receive a chain payment from the intermediary.

61TClient-led status disagreement process

1

This section applies if, before the final chain payment is made in the case of an engagement to which this Chapter applies, the worker or the deemed employer makes representations to the client that the conclusion contained in a status determination statement is incorrect.

2

The client must either—

a

give a statement to the worker or (as the case may be) the deemed employer that—

i

states that the client has considered the representations and has decided that the conclusion contained in the status determination statement is correct, and

ii

states the reasons for that decision, or

b

give a new status determination statement to the worker and the deemed employer that—

i

contains a different conclusion from the conclusion contained in the previous status determination statement,

ii

states the date from which the client considers that the conclusion contained in the new status determination statement became correct, and

iii

states that the previous status determination statement is withdrawn.

3

If the client fails to comply with the duty in subsection (2) before the end of the period of 45 days beginning with the date the client receives the representations, section 61N(3) and (4) has effect from the end of that period until the duty is complied with as if for any reference to the fee-payer there were substituted a reference to the client; but this is subject to section 61V.

4

A new status determination statement given to the deemed employer under subsection (2)(b) is to be treated for the purposes of section 61N(8)(za) as having been given to the deemed employer by the person immediately above the deemed employer in the chain.

5

In this section—

• “the deemed employer” means the person who, assuming one of conditions A to C in section 61N were met, would be treated as making a deemed direct payment to the worker under section 61N(3) on the making of a chain payment;

• “status determination statement” has the meaning given by section 61NA.

61TADuty for client to withdraw status determination statement if it ceases to be medium or large

1

This section applies if in the case of an engagement to which this Chapter applies—

a

the client is not a public authority,

b

the client gives a status determination statement to the worker, the client's agent or both, and

c

the client does not (but for this section) qualify as medium or large for a tax year beginning after the status determination statement is given.

2

Before the beginning of the tax year the client must give a statement to the relevant person, or (as the case may be) to both of the relevant persons, stating—

a

that the client does not qualify as medium or large for the tax year, and

b

that the status determination statement is withdrawn with effect from the beginning of the tax year.

3

If the client fails to comply with that duty the following rules apply in relation to the engagement for the tax year—

a

the client is to be treated as medium or large for the tax year, and

b

section 61N(3) and (4) have effect as if for any reference to the fee-payer there were substituted a reference to the client.

4

For the purposes of subsection (2)—

a

the worker is a relevant person if the status determination statement was given to the worker, and

b

the deemed employer is a relevant person if the status determination statement was given to the client's agent.

5

In this section—

• “client's agent” means a person with whom the client entered into a contract as part of the arrangements mentioned in section 61M(1)(c);

• “the deemed employer” means the person who, assuming one of conditions A to C in section 61N were met, would be treated as making a deemed direct payment to the worker under section 61N(3) on the making of a chain payment;

• “status determination statement” has the meaning given by section 61NA.

4A

This section does not apply where the provision of the relevant services gives rise (directly or indirectly) to an engagement to which Chapter 10 applies and either—

a

the client for the purposes of section 61M(1) is a public authority, or

b

the client for the purposes of section 61M(1)—

i

qualifies as medium or large for the tax year in which the payment or benefit mentioned in subsection (1)(b) is received, and

ii

has a UK connection for the tax year in which the payment or benefit mentioned in subsection (1)(b) is received.

4B

Sections 60I (when a person has a UK connection for a tax year), 61K(3) (when a person qualifies as medium or large for a tax year) and 61L (meaning of public authority) apply for the purposes of subsection (4A).

4C

It does not matter for the purposes of subsection (4A) whether the client for the purposes of this Chapter is also “the client” for the purposes of section 61M(1).

688AAWorkers' services provided through intermediaries: recovery of PAYE

1

PAYE Regulations may make provision for, or in connection with, the recovery of a deemed employer PAYE debt from a relevant person.

2

“A deemed employer PAYE debt” means an amount—

a

that a person (“the deemed employer”) is liable to pay under PAYE regulations in consequence of being treated under section 61N(3) as having made a deemed direct payment to a worker, and

b

that an officer of Revenue and Customs considers there is no realistic prospect of recovering from the deemed employer within a reasonable period.

3

“Relevant person”, in relation to a deemed employer PAYE debt, means a person who is not the deemed employer and who—

a

is the highest person in the chain identified under section 61N(1) in determining that the deemed employer is to be treated as having made the deemed direct payment, or

b

is the second highest person in that chain and is a qualifying person (within the meaning given by section 61N(8)) at the time the deemed employer is treated as having made that deemed direct payment.

3A

This exception applies in so far as—

a

the payment can reasonably be taken to be for the services of an individual, and

b

the provision of those services gives rise to an engagement to which Chapter 10 of Part 2 of ITEPA 2003 applies (workers' services provided through intermediaries to public authorities or medium or large clients).

3B

But the exception in subsection (3A) does not apply if, in the case of the engagement mentioned in paragraph (b) of that subsection, the client for the purposes of section 61M(1) of ITEPA 2003—

a

is not a public authority, and

b

either—

i

does not qualify as medium or large for the tax year in which the payment concerned is made, or

ii

does not have a UK connection for the tax year in which the payment concerned is made.

3C

Sections 60I (when a person has a UK connection for a tax year), 61K(3) (when a person qualifies as medium or large for a tax year) and 61L (meaning of public authority) of ITEPA 2003 apply for the purposes of subsection (3B).