Income Tax (Earnings and Pensions) Act 2003 section 52

Conditions of liability where intermediary is a partnership

Section 52 sets out the conditions that must be met for the intermediaries legislation (sometimes known as IR35) to apply where the intermediary between the worker and the client is a partnership.

• Where the worker receives payments or benefits as a partnership member, liability arises if the worker (alone or with relatives) is entitled to 60% or more of the partnership profits, or if most profits derive from services to a single client or that client's associates, or if profit shares are linked to income each partner individually generates from relevant engagements.
• For the purposes of this section, a "relative" includes a spouse or civil partner, a parent, child or remoter direct-line relation, or a brother or sister.
• Where the worker receives payments or benefits other than as a partnership member, the conditions are met if the payment comes directly from the partnership and can reasonably be seen as remuneration for services the worker provides to the client.
• These tests are designed to catch arrangements where a worker uses a partnership structure to disguise what is, in substance, an employment relationship with a client.