Corporation Tax Act 2009

1129 Qualifying expenditure on externally provided workers: connected persons

(1) This section applies if—

(a) a company makes a staff provision payment,

(b) the company and the staff provider are connected, and

(c) in accordance with generally accepted accounting practice, the whole of the staff provision payment and all of the staff provider’s relevant expenditure have been brought into account in determining the staff provider’s profit or loss for a relevant period.

(2) The company’s qualifying expenditure on externally provided workers is—

(a) the entire staff provision payment, or

(b) if less, an amount equal to the staff provider’s relevant expenditure.

(3) “Relevant expenditure” of the staff provider means expenditure that—

(a) is incurred by the staff provider in providing for the company the externally provided workers to whom the staff provision payment relates,

(b) is not of a capital nature, and

(c) is incurred on staffing costs or agency workers' remuneration.

(4) “Relevant period” means a period—

(a) for which accounts are drawn up for the staff provider, and

(b) that ends not more than 12 months after the end of the company’s period of account in which the staff provision payment is, in accordance with generally accepted accounting practice, brought into account in determining the company’s profit or loss.

(5) In section 1123 (meaning of “staffing costs”), which applies for the purpose of determining whether the staff provider’s expenditure meets the requirements of subsection (3)(c), references to a company are to be read as references to the staff provider.

(6) “Agency workers' remuneration”, in the case of any person who is an externally provided worker in relation to the company, means remuneration that—

(a) is receivable by the worker under or in consequence of the contract mentioned in section 1128(7), but

(b) does not constitute employment income of the worker apart from Chapter 7 of Part 2 of ITEPA 2003 (application of provisions to agency workers).

(7) Any apportionment of expenditure of the company or staff provider necessary for the purposes of this section is to be made on a just and reasonable basis.