The rules are not intended to prevent workers from providing their services through intermediaries. However, they will help to discourage the practice of routing engagements through intermediaries simply in order to take advantage of a tax and NICs regime which may be more favourable than that which would apply if the worker were to be taken on as a direct employee of the client. The rules will be applied in respect of each engagement, in the same way as they apply to individuals who operate without intermediaries.
Similar rules are under consideration to exempt partners in larger partnerships.
It will not be necessary for clients to check whether the legislation applies when they enter into a contract with an intermediary, or to conduct new checks on the status of the intermediary. There will be no certification scheme. The intention is that all the money received by the intermediary in respect of a relevant engagement, minus certain deductions listed below, should be treated as paid to the worker in a form subject to Schedule E tax and Class 1 NICs. However, the Inland Revenue s current practice of including small amounts of Schedule E income in the calculation of Schedule D profits for the self employed, including partners, will apply also in these cases.