Employment income provided through third parties: exclusions: commercial transactions other than loans
Section 554F ITEPA 2003
If an arrangement comes through the Section 554A gateway, and the relevant step is not a payment of a sum of money by way of loan, Section 554F(2) prevents the step from giving rise to Part 7A income if four conditions are met.
The step is taken for the sole purpose of a transaction which:
- the person (P) taking the step has with A, and
- P entered into in the ordinary course of P’s business.
- A substantial proportion of P’s business involves similar transactions with members of the public at large with whom P deals at arm’s length.
- The terms on which P entered into the transaction with A are substantially the same as the terms on which P normally enters into similar transactions with members of the public with whom P deals at arm’s length. A transaction is ‘similar’ if it is of the same type as, or a similar type to, P’s transaction with A.
- There is no connection (direct or indirect) between the relevant step and a tax avoidance arrangement (see EIM45855).
For the purposes of Section 554F, ‘A’ includes persons linked with A. See EIM45860.