Income Tax (Earnings and Pensions) Act 2003 section 61O

Conditions where intermediary is a company

Section 61O sets out the conditions that must be met for the off-payroll working rules to apply where the intermediary in the labour supply chain is a company.

• The intermediary company must not be an associated company of the client by reason of the worker's control, and the worker must have either a material or non-material interest in the intermediary
• A material interest means the worker (alone or with associates) holds a significant stake in the company, as defined elsewhere in the Act; a non-material interest means ownership or control of 5% or less of the ordinary share capital, distributions, or assets on winding up
• Where the worker has only a non-material interest, the rules apply only if the worker has received, expects to receive, or has rights to receive a chain payment from the intermediary that does not wholly constitute employment income
• An associated company exclusion applies where the intermediary and the client are both under the control of the worker, or of the worker together with other persons