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HMRC internal manual

Employment Income Manual

Employment income provided through third parties: the Section554A gateway: all the relevant circumstances

Section 554A(12) ITEPA 2003

You must take account of all the relevant circumstances in order to get to the essence of the matter and decide whether, as a matter of fact, the conditions in EIM45025 are met and the arrangement comes through the Section 554A gateway.

This particularly holds true of conditions 2, 3 and 5 in EIM45025 (Section 554A(1)(c) and (e)).

Example: states of mind

For example, if A or B is aware of the transactions or both of them are - that will be relevant.

But the converse does not hold. Lack of awareness is not necessarily a relevant circumstance, because lack of awareness can be arranged. It will all depend on the facts of the case.

Example: in the normal course of domestic, family or personal relationships

Suppose there is an arrangement involving A, B and P, and P takes a relevant step in the normal course of P’s domestic, family or personal relationships.

This will not come through the Section 554A gateway because Section 554A(12) will apply.

Taking account of all the relevant circumstances, you can conclude that the relevant arrangement, or relevant step, was not in connection with A’s employment.

The benefits code excludes such transactions from charge in so many words. See Sections 71, 174 and 201 ITEPA 2003. Part 7A does not. Instead, Part 7A includes Section 554A(12), which would prevent a charge arising in those circumstances.

For examples of exclusions from the benefits code, see EIM20502 (expenses paid and benefits provided) and EIM26114 (beneficial loans).