ESM3010 – Introduction: summary of the legislation

Schedule 12 Finance Act 2000/Part 2 Chapter 8 ITEPA 2003

Sections 75 and 76 Welfare Reform & Pensions Act 1999

Social Security Contributions (Intermediaries) Regulations 2000 (SI 2000 No.727)

Social Security Contributions (Intermediaries) (Northern Ireland) Regulations 2000 (SI 2000 No.728)

Intermediaries, such as service companies and partnerships, have been used for many years to avoid paying tax under Schedule E/on employment income and Class 1 NICs and to generally reduce an individual’s personal liability. Legislation was introduced with effect from 6 April 2000 to stop this:

• for tax purposes, in Finance Act 2000; and
• for NICs purposes, in section 75 of the Welfare Reform and Pensions Act 1999, with the detail in the Social Security Contributions (Intermediaries) Regulations 2000

In Northern Ireland, the equivalent NICs provisions are section 76 of the Welfare Reform and Pensions Act 1999 and the Social Security Contributions (Intermediaries) (Northern Ireland) Regulations 2000. For simplicity, reference is made only to the Great Britain legislation in the rest of this guidance.

The legislation applies to income received in respect of services performed on or after 6 April 2000.

The measures were announced in a 1999 Budget Press Release. They generated a lot of interest and are frequently referred to by the number of the press release, IR35.