"Employment Income" clause

by tbontour at 10:11 25/06/19 (Ask-Legal-Accounting)

What does the following contract clause really mean?: "The Consultancy will ensure that all remuneration it pays any personnel engaged on the Services is paid and taxed as employment income, within the meaning of the Income Tax (Earnings and Pensions) Act 2003 as amended."

I have been sent an updated master agreement by my company's client and it includes the above clause. Firstly, I would like to know what the clause really means, in plain English. Secondly, like most limited company directors I receive dividends and salary from my company and also claim expenses. Given that the vast majority of my company's income is from the above client, does this clause restrict the way my company is allowed to distribute its income to shareholders and directors? If I take dividends then will I be in breach of my client's contract? Thanks TB

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