Income Tax (Earnings and Pensions) Act 2003 section 49

Engagements to which this Chapter applies

Section 49 defines when the intermediaries legislation (commonly known as IR35) applies to an engagement where an individual provides services to a non-public-authority client through a third party rather than directly.

• The rules apply where a worker personally performs (or is obliged to perform) services for a client who is not a public authority, and those services are provided through an intermediary rather than under a direct contract between worker and client
• The key test is whether, if a hypothetical direct contract existed between the worker and the client, the worker would be treated as an employee or office-holder of the client for income tax purposes
• The intermediary can include a partnership or unincorporated body of which the worker is a member, and the assessment must consider the terms of all contracts in the chain of arrangements, not just the worker's own contract
• Acting as statutory auditor of the client is specifically excluded from being treated as holding an office under the client