Income Tax (Earnings and Pensions) Act 2003 section 46A

Anti-avoidance

Section 46A is a targeted anti-avoidance rule (TAAR) that prevents arrangements designed to circumvent the agency worker tax rules in section 44, ensuring that individuals who personally provide services through an agency-like structure cannot avoid employment income tax through contrived schemes.

• Where an individual personally provides services to a client, and a third party sets up arrangements mainly intended to sidestep the agency worker rules in section 44, this anti-avoidance provision brings those services back within the scope of section 44
• "Arrangements" is defined very broadly to include any scheme, transaction, series of transactions, agreement, understanding (whether legally enforceable or not), and any associated operations
• When the anti-avoidance rule is triggered, the individual is treated as the worker, the person receiving the services as the client, and the third party who entered into the arrangements as the agency
• When section 44 is applied under this anti-avoidance rule, its usual exceptions in subsections (4) to (6) are switched off, meaning the standard escape routes from agency worker treatment are not available