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HMRC internal manual

Employment Status Manual

Basic principles: off-payroll working: conditions of liability

Sections 61O and 61P Chapter 10 ITEPA 2003

Regulations 15 and 16 The Social Security (Miscellaneous Amendments No.2) Regulations 2017

 

This legislation will only apply where the intermediary satisfies one of three specific conditions, A to C below. This page provides further details of each of those conditions which will vary depending on the form of the intermediary. 

 

Condition A

-            The intermediary is a company and

-            is not an associated company of the client as set out below and

-            the worker has a material interest in the intermediary as set out below.

For this condition “associated company” has the meaning given by section 449 CTA 2010. A company is associated with the client if both the intermediary and the client are under the control of the worker or the worker and other persons.

Material interest has the meaning given by section 51(4) and (5) ITEPA 2003. The worker is treated as having a material interest in the intermediary if;

-            The worker alone, or with one or more associates of the worker, or

-            As associate of the worker, with or without other associates of the worker

has a material interest in the intermediary.

 

Condition B

-            The intermediary is a partnership and

-            The worker is a member of the partnership and

-            the provision of the services is by the worker as a member of the partnership and

-            one of the following, 1-3, is met;

(1)         The worker, alone or with one or more relatives, is entitled to 60% or more of the profits of the partnership

(2)         Most of the profits of the partnership derive from the provision of services under engagements to which either Chapters 8 or 10 ITEPA 2003 applies;

a.           To a single client or,

b.           To a single client together with associates of that client

(3)         Under the profit sharing arrangements the income of any of the partners if based on the amount of income generated by that partner by the provision of services under engagements to which either Chapter 8 or 10 ITEPA 2003 applies.

For the purposes of this condition “relative” means spouse, civil partner, parent, child or remoter relation in the direct line, or brother or sister.

Sections 61(4) and (5) apply equally here as they do for the purposes of Chapter 8 ITEPA 2003.

 

Condition C

-            The intermediary is an individual