Managed service companies

164ADeduction for deemed employment payments

1

This section applies for the purpose of calculating the profits of a trade, profession or vocation carried on by a managed service company (“the MSC”) which is treated as making a deemed employment payment in connection with the trade, profession or vocation.

2

A deduction is allowed for—

a

the amount of the deemed employment payment, and

b

the amount of any employer's national insurance contributions paid by the MSC in respect of it.

3

The deduction is allowed for the period of account in which the deemed employment payment is treated as made.

4

The amount of the deduction allowed under subsection (2) is limited to the amount that reduces the profits of the firm for the tax year to nil.

5

No deduction in respect of—

a

the deemed employment payment, or

b

any employer's national insurance contributions paid by the MSC in respect of it,

may be made except in accordance with this section.

6

In this section “deemed employment payment”, “employer's national insurance contributions” and “managed service company” have the same meaning as in Chapter 9 of Part 2 of ITEPA 2003.