Step three in calculating the deemed employment payment requires a deduction for any expenses met by the intermediary which would have been deductible from the taxable earnings of the employment had the worker been employed by the client and had those expenses been paid by the worker out of those earnings. The deductible expenses on this basis are obviously much more restrictive than the expenses which are deductible in a trading income computation of the intermediary.
The deduction is not limited to expenses met by the intermediary — it also covers expenses that are met by the worker and reimbursed by the intermediary. In the event that the intermediary is a partnership and the worker
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