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

Anti-avoidance

Section 61WA is an anti-avoidance measure that targets arrangements within the off-payroll working (IR35) rules where someone in the labour supply chain tries to avoid the conditions that would otherwise trigger deemed employment tax treatment.

• Where a person in the chain participates in an arrangement whose main purpose is to secure a tax advantage by ensuring the off-payroll working conditions are not met, this anti-avoidance rule applies to override that arrangement
• The tax obligations that would normally fall on the fee-payer (the entity paying the worker's intermediary) are redirected to the "participating person" — the person involved in the avoidance arrangement
• If more than one person in the chain participated in the arrangement, the obligation falls on the highest person in the chain from whom HMRC considers it realistic to recover the tax within a reasonable period
• The rule applies even if it results in the same person being treated as both employer and employee for the purposes of the deemed employment, and "arrangement" is defined very broadly to include any agreement, understanding, scheme, or series of transactions whether or not legally enforceable