Section 40B | Professionals in practice: incidental income from an office or employment

(1)This section applies where—

(a)a payment is received by an individual who carries on a profession in partnership,

(b)the payment is made to the individual in his or her capacity as an employee or office-holder, but is not made in respect of employment as a director of a company,

(c)the payment would otherwise be employment income of the individual chargeable to tax under Part 2 of ITEPA 2003, and

(d)the conditions in subsection (3) are met.

(2)The payment is to be treated for corporation tax purposes as a receipt of a trade carried on by the firm.

(3)The conditions referred to in subsection (1)(d) are that—

(a)the time spent by the individual in performing the duties of the office or employment is insubstantial compared with the time spent by the individual in carrying on the profession,

(b)the office or employment is related to the profession carried on by the individual,

(c)the amount of the payment is insubstantial compared with so much of the total amount brought into account as receipts when calculating the firm’s profits as is attributable to the individual, and

(d)the individual is required by the terms of the partnership agreement to account to the firm for the payment and does so.