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Income Tax (Earnings and Pensions) Act 2003

Section 352: Limited deduction for agency fees paid by entertainers

1521.This section provides for a deduction for entertainers in respect of fees paid to their agents for finding them work. The section derives from part of section 201A of ICTA.

1522.Section 201A was introduced to allow entertainers who are in employment to get relief for the fees they pay to their agents for finding them work. Such fees are not deductible under the general rule for the deduction of expenses in section 198(1) of ICTA (rewritten in section 336 of this Act) for two reasons. First, they are paid to put the performer in the position to earn from the employment. They are not, therefore, expended “in the performance of the duties of the employment”. Secondly, as not every entertainer uses the services of an agent, the expense does not pass the “necessarily” test.

1523.Subsection (1) states the basic principle that a deduction is allowed, subject to certain conditions being met.

1524.In subsection (2) the way the limit of 17.5% of the taxable earnings is expressed differs slightly from the source legislation. See Change 92 in Annex 1.

1525.Subsection (4) defines “entertainer” for the purposes of this section.

1526.Subsection (5) defines “agency fees”, by reference to the contract or arrangement under which the entertainer pays them. The use of the word “paid” in this subsection means that it is not sufficient for the employee only to have incurred the liability to pay the fee. The employee has to have transferred value to the agent by way of payment for the deduction to be allowed.

1527.Subsection (6) restricts the scope of what counts as a “co-operative society” for the purposes of the section. It also gives a signpost to the external definition of “employment agency”.

1528.Section 201A(6), which contains the commencement date, has not been reproduced because it is now spent.

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