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Section 44 ITEPA (Income Tax (Earnings and Pensions) Act 2003)

Colloquially known as the ‘agency legislation’, Sections 44-47 ITEPA provide a stringent and pitfall-laden test for all parties in the contractual chain where individuals are engaged on a self-employed basis via an intermediary.  For businesses to comply with such a strict test, the best and most accurate advice, drafting and representation are required.

Comprehensive Section 44 ITEPA Services for the Entire Contractual Chain

Whether you are ‘intermediary 1’ and prima facie liable under the legislation, the ultimate end-client concerned about the ‘fraudulent document’ provisions or an umbrella company supplying into ‘intermediary 1’ concerned about what due diligence is needed to satisfy the ‘supervision, direction or control test (SDC)’, Chartergates are the advisers best placed and best qualified to advise you. Our comprehensive services include:

Expert Advice:

The SDC test is difficult to satisfy and contains numerous traps for those who have been poorly advised.  What’s more, it is increasingly difficult for businesses to understand the SDC test, when the labour supply industry is inundated with inaccurate fallacies.  The experts at Chartergates have the skills and experience to bring clarity to the businesses that desperately require it.

Precise Drafting:

The SDC test requires an understanding of the entire contractual chain and the practical realities so that accurate and compliant documents can be drafted.  Engaging with Chartergates ensures detailed, accurate and commercial drafting in line with legislation and case law.

HMRC representation:

With the burden of proof on the taxpayer to ‘show’ they are outside the SDC test, the stakes are high and that is why we are committed to representing our clients robustly, keeping HMRC in check and on the correct legal path.

Tribunal representation:

The SDC test has been drafted by HMRC and as such it is firmly in their favour.  That doesn’t mean HMRC are always correct or that they pursue the right cases to tribunal.  Engaging our skilled advocates ensures your interests are represented & pursued robustly.

Section 44 ITEPA (Income Tax (Earnings and Pensions) Act 2003)

Targeted Legislation Requires Expert Advisers

Section 44 ITEPA is part of HMRC’s targeted approach to compliance in the labour supply sector and one of the numerous challenges faced by recruitment businesses and umbrella companies.  Chartergates are expert consultants and advocates in the labour supply sector.  Whether you require advice, drafting, HMRC enquiry or tribunal representation look no further than the team at Chartergates.

Our Tax Services & How We Provide Them

Our specialist tax consultancy and representation services can be provided on a fixed-fee basis, an hourly rate, on a retained basis and in some circumstances on a contingency basis.  Call us today for a free no obligation consultation with our team about our services which include:

  • Advice and consultancy on all areas of tax
  • HMRC enquiry representation
  • Tax tribunal representation
  • Contract reviews and drafting
  • Paper reviews for ongoing disputes
Man signing a tax document

Related Content

Frequently Asked Questions: Section 44 ITEPA and Labour Supply Compliance

What is Section 44 of the Income Tax (Earnings and Pensions) Act 2003?

Section 44 ITEPA (Income Tax Earnings and Pensions Act 2003) is commonly referred to as the “agency legislation.” It targets arrangements where workers are supplied through intermediaries and treated as self-employed for tax purposes. Where those workers are found to be under supervision, direction, or control (SDC), or subject to the right of SDC, then they must be treated as employed for tax and National Insurance purposes.
The SDC test determines whether a worker is subject to oversight in how they complete their tasks. If SDC (or a sufficient right for another party to exercise SDC) is present, HMRC may require the workers to be treated as employed for tax purposes and tax to be deducted at source. This test is complex, and the effects are recorded differently based on contract terms, working practices, and the nature of the engagement.
Section 44 places responsibilities on most parties in the contractual chain, including intermediary 1, umbrella companies, and end clients. Each must perform due diligence to avoid falling foul of the rules. The affected provisions of the legislation require precise understanding and professional advice.
Yes, the text of the legislation is fully up to date, with revised legislation carried on government legislation sites. Updates and changes are recorded by our editorial team and communicated via our weekly newsletters.
Chartergates provides expert services covering advice, contract drafting, HMRC enquiries, and tribunal representation. We ensure compliance with Section 44 by understanding both the legal wording and the practical realities of the labour supply sector.

Umbrella companies and recruitment agencies must ensure that workers they treat as self-employed for tax purposes are not under SDC (or subject to a sufficient right of SDC), or else they may become liable for PAYE obligations. Section 44 is part of a targeted legislation area aimed at improving compliance and reducing tax avoidance in temporary labour supply.

If HMRC deems that Section 44 applies, the burden of proof lies with the taxpayer to demonstrate otherwise. Failure to do so can result in unexpected tax and NICs liabilities. Chartergates helps defend clients robustly, whether through correspondence or in tribunal.

Disclaimer: Chartergate Legal Services Ltd has drafted these FAQs to provide a general overview of the relevant law only.  These FAQs are not a substitute for professional advice that is specific to your circumstances and should not be relied upon as such.

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