Section 289E — Income Tax (Earnings and Pensions) Act 2003: Anti-avoidance

Anti-avoidance 289E 1 This section applies if conditions A to C are met.

2 Condition A is that, pursuant to arrangements, an amount—

a is paid or reimbursed to an employee in respect of expenses, or b is treated as earnings of an employee as a result of the provision of a benefit, which, in the absence of this section, would have been exempt from income tax.

3 Condition B is that, in the absence of those arrangements, the employee would have received a greater amount of general earnings or specific employment income in respect of which—

a tax would have been chargeable, or b national insurance contributions would have been payable (whether by the employee or another person).

4 Condition C is that the main purpose, or one of the main purposes, of the arrangements is the avoidance of tax or national insurance contributions.

5 If this section applies—

a the exemption conferred by section 289A does not apply in respect of the amount paid or reimbursed as mentioned in subsection (2)(a),

and b the exemption conferred by section 289D does not apply in respect of the amount treated as earnings as mentioned in subsection (2)(b).

6 In this section “ arrangements ” includes any scheme, transaction or series of transactions, agreement or understanding, whether or not legally enforceable.