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HMRC internal manual

Employment Status Manual

From
HM Revenue & Customs
Updated
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How to work out the taxable profits of the intermediary: company example

H Services Ltd makes its accounts up to 30 April each year. In the period ending 30 April 2001, it has income from relevant engagements of £45,000 on which an adjusted taxable profit of £35,000 arises. Under the legislation it is treated as making a deemed payment of £31,000 on which secondary Class 1 NICs liability of £3,222 are paid.

The profits chargeable to corporation tax for the period ending 30 April 2001 become:

Adjusted taxable profit   35000
     
  Deduct  
Deemed payment 31000  
Secondary Class 1 NICs 3222  
Total deductions 34222 34222
Revised taxable profit   778

No deduction is made in the company’s accounts or corporation tax computation for the notional 5% allowance made in computing the deemed payment.