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THE INLAND REVENUE'S press release of 15 March 2002 entitled 'Service company workers to get the same mileage allowances as employees' announced amendments to the IR35 legislation which took effect from 6 April 2002; they address two particular issues. The first is the reimbursement of expenses by the intermediary (usually the company) to the worker and the second is the anomalies that arise on cessation of business. However in order to follow the proposed amendment to the service company legislation it is important to understand the deemed payment calculation as originally enacted.
Reimbursed expenses
Step Three in the calculation allows a deduction for certain expenses met by the intermediary in the year. The Revenue's Employment Status Manual at paragraph 3162 comments as follows on deductions made at this step:
'Step Three provides for a deduction to be made in working out...
