ESM8055 - Conditions of liability: where the intermediary is a partnership

Paragraph 4 Schedule 12 Finance Act 2000 / Section 52 Chapter 8 ITEPA 2003

Regulation 5(5), (6) and (7) SI 2000 No.727

The legislation is intended to apply only to those partnerships which have been set up to control the form in which income from relevant engagements is passed to a worker. It will therefore not apply to most partnerships.

The legislation is not likely to apply to those partnerships which are legitimate businesses but which may occasionally second a partner to work for a client in circumstances which might otherwise be caught by the legislation.

Where the intermediary is a partnership, the following conditions must be satisfied for the legislation to apply:

  • the worker, alone or with one or more relatives, is entitled to 60% or more of the profits of the partnership, or
  • most of the profits of the partnership derive from the provision of services from relevant engagements with a single client and that client’s associates, or
  • under the profit sharing arrangements the income of any partner is based upon the income generated by that partner from relevant engagements.

It is important to bear in mind that, even if the partnership conditions outlined above are satisfied, the legislation will only apply if the general conditions as set out at ESM8080 are also satisfied.