Employment Income: Scope

11

Whether a contract is one of service or for services appears to be one of law, so far as the identification of the relevant criteria is concerned, but the balancing process of applying those criteria seems to be left to the Commissioners as a question of fact. ⁶⁰

Over the years, the Revenue has waged campaigns to bring many people within schedule E by threatening to make the payer responsible for the payment of income tax under the PAYE system. The payer usually submits to this pressure since there is nothing to gain by resisting.⁶¹ The Revenue has issued an explanatory booklet IR 56.⁶² One may contrast the delegated power for the DSS to categorise workers by statutory instrument.⁶³

Arrangements made by Intermediaries The FA 2000 IR 35 Legislation.⁶⁴

ITEPA part 2 chapter 8, previously FA 2000, schedule 12, enlarges the scope of the charge where three principal conditions are satisfied.

1. An individual, X, performs services for another person (‘the client’), A Ltd.
2. The services are provided not under a contract directly between A Ltd, the client, and X, the worker, but under arrangements involving a third party (‘the intermediary’) X Ltd; the intermediary may be a company, a partnership or an individual⁶⁵ (but not apparently a trust); intermediary status arises if it is a company in which X has a material interest, either alone or with associates, or it makes payment to X, eg a dividend, which is not taxable as employment income but can reasonably be taken to represent remuneration for services provided by X to A Ltd.
3. The circumstances are such that, if the services were provided under a contract directly between the client and the worker, the worker would be regarded for income tax purposes as an employee of the client.⁶⁶

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