Background
3.The intermediaries legislation in Chapter 8 of Part 2 of ITEPA 2003 considers the underlying nature of the relationship between the worker and the engager; if this relationship would be considered to be employment, if it were not for the interposition of the intermediary, then the legislation applies. Where the intermediaries legislation applies, the income received by the intermediary (third party) is deemed to be employment earnings of the worker and the worker is liable for income tax on it, calculated in accordance with Chapter 8.
4.This change equalises the tax treatment of office holders engaged through third parties with the treatment under the relevant National Insurance legislation, under which they are already in the same position as individuals who would be in an employment relationship if engaged directly.
5.Section 5(3) of ITEPA provides a non-exhaustive definition of the term “office”, which applies to this section. It states that “office” includes in particular any position which has an existence independent of the person who holds it and may be filled by successive holders. It is based on guidelines derived from case law: see in particular Great Western Railway Company v Bater (1922) 8 TC 231 and Edwards v Clinch (1981) 56 TC 367. However, since these are only guidelines, any explanation can only be non-exhaustive. An office is a separate and independent position to which duties are attached; an office does not owe its existence to the incumbent or the discretion of an organisation. For example, the post of manager of a factory or a head of division in an organisation is not an office because such a post will normally only exist as long as the organisation wishes. It will not have the independent existence or endurance required to establish it as an office.
