Income Tax (Earnings and Pensions) Act 2003 section 312G

"Service company"

Section 312G defines what constitutes a "service company" for the purposes of the qualifying bonus payment exemption under section 312B, since one of the conditions for that exemption is that the employer must not be a service company.

• A service company is either a managed service company (as defined elsewhere in the Act) or a company whose business consists substantially of supplying the services of its own employees and which meets further ownership and control conditions.
• The company will be treated as a service company if the majority of those employee services are provided to persons who control (or have controlled) the company, or who previously employed most of its workers, but who are not members of the same corporate group as the company paying the bonus.
• The definition also catches services provided to any 51% subsidiary, connected company, or associated company of the controlling or formerly employing persons, and treats partnerships as a single person for the purpose of assessing control.
• The terms "associated company", "control", and "connected persons" take their meanings from the Corporation Tax Act 2010, the Income Tax Act 2007, and the Taxation of Chargeable Gains Act 1992 respectively.