"Ignorance of the law is no excuse" so the adage goes. See if you can work out what you need to do to meet the exemption in subsection 5? The official explanatory notes and our crib sheet are below.
Finance Bill 2016 Clause 14
(1) In Chapter 2 of Part 5 of ITEPA 2003 (deductions for employee’s expenses), after section 339 insert—
“339ATravel for necessary attendance: employment intermediaries
(1)This section applies where an individual (“the worker”)—
(a) personally provides services (which are not excluded services) to another person (“the client”), and
(b) the services are provided not under a contract directly between the client or a person connected with the client and the worker
but under arrangements involving an employment intermediary.
This is subject to the following provisions of this section.
(2) Where this section applies, each engagement is for the purposes of sections 338 and 339 to be regarded as a separate employment.
(3) This section does not apply if it is shown that the manner in which the worker provides the services is not subject to (or to the right of) supervision, direction or control by any person.
(4) Subsection (3) does not apply in relation to an engagement if—
(a) Chapter 8 of Part 2 applies [IR35] in relation to the engagement,
(b) the conditions in section 51, 52 or 53 are met in relation to the employment intermediary, and
(c) the employment intermediary is not a managed service company.
(5) This section does not apply in relation to an engagement if—
(a) Chapter 8 of Part 2 does not apply in relation to the engagement merely because the circumstances in section 49(1)(c) are not met,
(b) assuming those circumstances were met, the conditions in section 51, 52 or 53 would be met in relation to the employment intermediary, and
(c) the employment intermediary is not a managed service company.
(6) In determining for the purposes of subsection (4) or (5) whether the conditions in section 51, 52 or 53 are or would be met in relation to the employment intermediary—
(a) in section 50(1)(b), disregard the words “that is not employment income”, and
(b) read references to the intermediary as references to the employment intermediary.
continued.....see Finance Bill 2016
Government explanatory note
Where the conditions in subsection (5) of section 339A are met, section 339A does not apply. So each engagement is not regarded as a separate employment. This subsection does not apply where the employment intermediary is a managed service company.
The explanatory note makes it sound quite reasonable but can you work out what conditions to meet?
Crib sheet below...
Crib sheet [square brackets are added by us to help you]
(5) This section [the new s339A] does not apply in relation to an engagement if—
(a) Chapter 8 of Part 2 [IR35] does not apply in relation to the engagement merely because the circumstances in section 49(1)(c) [these circumstances are that: if worker provided services to the client directly they would be a worker, or worker is an office holder etc] are not met,
(b) assuming those circumstances were met, the conditions in section 51, 52 or 53 [the Conditions of liability, e.g. where intermediary is a company/partnership/individual] would be met in relation to the employment intermediary, and
(c) the employment intermediary is not a managed service company.
Final note
HMRC has published draft guidance for its manuals to the new section 339A however this manages to avoid any mention of subsection (5). The subsection was not included in the first draft of FB 2016: that probably explains its ommission.
Answer: our explanation
Subsection (5) excludes owner managed companies from the new travel restriction provided that their contract does not fall within IR35.
