HMRC internal manual

Employment Status Manual

ESM8090 - Basic principles: what happens when there is a payment from a relevant engagement - example

You should check the other guidance available on GOV.UK from HMRC as Brexit updates to those pages are being prioritised before manuals.

The amount paid by the client to the intermediary is unaffected by the intermediaries legislation. The client pays B Services Ltd the full amount due under the terms of the contract, i.e. £20,000.

This has the following consequences:

  • the amount of £20,000 is be taken into account in working out the amount of the deemed payment which B Services Ltd is treated as making to the worker (Mrs B).
    • Mrs B is treated as receiving a deemed payment based upon the amount of £20,000
    • this deemed payment is taxable as employment income and subject to Class 1 NICs
    • the deemed payment is normally treated as paid on 5 April, that is, the last day of the tax year in question, and
  • B Service Ltd’s taxable profits for the accounting period in which the deemed payment is treated as paid are reduced by the amount of the deemed payment and the employer’s Class 1 NICs paid on it