Section 61N — Income Tax (Earnings and Pensions) Act 2003: Worker treated as receiving earnings from employment

Worker treated as receiving earnings from employment 61N 1 If one of Conditions A to C is met, identify the chain of two or more persons where—

a the highest person in the chain is the client, b the lowest person in the chain is the intermediary, and c each person in the chain above the lowest makes a chain payment to the person immediately below them in the chain. (See section 61U for cases where one of Conditions A to C is treated as being met.) 2 In this section and sections 61O to 61S— “ chain payment ” means a payment, or money's worth or any other benefit, that can reasonably be taken to be for the worker's services to the client, “make”—

in relation to a chain payment that is money's worth, means transfer, and in relation to a chain payment that is a benefit other than a payment or money's worth, means provide, and “ the fee-payer ” means the person in the chain immediately above the lowest.

3 The fee-payer is treated as making to the worker, and the worker is treated as receiving, a payment which is to be treated as earnings from an employment (“the deemed direct payment”), but this is subject to subsections (5) to (7) and (8A) and sections 61T , 61TA , 61V and 61WA .

4 The deemed direct payment is treated as made at the same time as the chain payment made by the fee-payer.

5 Unless and until the client gives a status determination statement to the worker (see section 61NA), subsections (3) and (4) have effect as if for any reference to the fee-payer there were substituted a reference to the client; but this is subject to sections 61V and 61WA . 5A Subsections (6) and (7) apply, subject to sections 61T, 61TA , 61V and 61WA , if—

a the client has given a status determination statement to the worker, b the client is not the fee-payer, and c the fee-payer is not a qualifying person.

6 If there is no person in the chain below the highest and above the lowest who is a qualifying person, subsections (3) and (4) have effect as if for any reference to the fee-payer there were substituted a reference to the client.

7 Otherwise, subsections (3) and (4) have effect as if for any reference to the fee-payer there were substituted a reference to the person in the chain who—

a is above the lowest, b is a qualifying person, and c is lower in the chain than any other person in the chain who—

i is above the lowest, and ii is a qualifying person.

8 In subsections (5) to (7) a “qualifying person” is a person who—

za has been given by the person immediately above them in the chain the status determination statement given by the client to the worker, a is resident in the United Kingdom or has a place of business in the United Kingdom, b is not a person who is controlled by—

i the worker, alone or with one or more associates of the worker, or ii an associate of the worker, with or without other associates of the worker, and c if a company, is not one in which—

i the worker, alone or with one or more associates of the worker, or ii an associate of the worker, with or without other associates of the worker, has a material interest (within the meaning given by section 51(4) and (5)). 8A If the client is not a public authority, a person is to be treated by subsection (3) as making a deemed direct payment to the worker only if the chain payment made by the person is made in a tax year for which the client qualifies as medium or large and has a UK connection.

9 Condition A is that—

a the intermediary is a company, and b the conditions in section 61O are met in relation to the intermediary.

10 Condition B is that—

a the intermediary is a partnership, b the worker is a member of the partnership, c the provision of the services is by the worker as a member of the partnership, and d the condition in section 61P is met in relation to the intermediary.

11 Condition C is that the intermediary is an individual.

12 Where a payment, money's worth or any other benefit can reasonably be taken to be for both—

a the worker's services to the client, and b anything else, then, for the purposes of this Chapter, so much of it as can, on a just and reasonable apportionment, be taken to be for the worker's services is to be treated as (and the rest is to be treated as not being) a payment, or money's worth or another benefit, that can reasonably be taken to be for the worker's services.