EIM45210 | Employment income provided through third parties: exclusions: commercial transactions other than loans

Section 554F ITEPA 2003

If an arrangement comes through the Section 554A gateway, and the relevant step is not a payment of a sum of money by way of loan, Section 554F(2) prevents the step from giving rise to Part 7A income if four conditions are met.

• The step is taken for the sole purpose of a transaction which:

• the person (P) taking the step has with A, and

• P entered into in the ordinary course of P’s business.

• A substantial proportion of P’s business involves similar transactions with members of the public at large with whom P deals at arm’s length.

• The terms on which P entered into the transaction with A are substantially the same as the terms on which P normally enters into similar transactions with members of the public with whom P deals at arm’s length. A transaction is ‘similar’ if it is of the same type as, or a similar type to, P’s transaction with A.

• There is no connection (direct or indirect) between the relevant step and a tax avoidance arrangement (see EIM45855).

For the purposes of Section 554F, ‘A’ includes persons linked with A. See EIM45860.