In its continuing efforts to clamp down on the practice of “disguised self-employment” HMRC is proposing the introduction of a new quarterly reporting regime for agencies and intermediaries who supply self-employed workers.
The 2014 Finance Act amended section 44 ITEPA 2003 (treatment of agency workers) so that self-employed workers who are supplied through an intermediary agency and are subject to (or to a right of) supervision, direction or control by the end client, are now deemed to be employees for tax and the employment intermediary is required to operate PAYE.
Under HMRC's new proposed quarterly reporting procedure an employment intermediary is required to provide specific personal details about themselves and those workers who have been paid outside of the operation of PAYE. In addition, the employment intermediary must provide details of the dates and hours worked by each of those workers and the payments they have received.
Returns must be submitted to HMRC within 30 days of the end of the return period and a return may be amended within a 30 day window of the filing deadline of the following return as follows
|
Return period |
Deadline |
Amendment deadline |
|
6 April to 5 July |
4 Aug |
4 Nov |
|
6 July to 5 Oct |
4 Nov |
4 Feb |
|
6 Oct to 5 Jan |
4 Feb |
5 May |
|
6 Jan to 5 April |
5 May |
4 Aug |
The employment intermediary must continue to make returns until either it has not placed any workers whom for it was not required to operate PAYE for three consecutive tax years, or it notifies HMRC that it is no longer an employment intermediary.
The definition of an employment intermediary is extended to reduce avoidance includes an employment agency that places multiple workers with clients other than on United Kingdom continental shelf and is not required to operate PAYE for some or all of those workers.
New regulations also introduce requirements for such agencies to retain records and further draft regulations are also pending: these are not subject to further consultation because they were included in the Finance Act provisions to be introduced by Treasury order (expected for introduction from 6 April 2015); these provide that agencies will be subject to penalties if they fail to furnish any information or produce any document or record in accordance with regulations under section 716B of ITEPA 2003 of up to £3,000 with daily penalties of £600 thereafter.
These draft regulations are now subject to a technical consultation which commenced on 1 October 2014 and will end on 25 November 2014. See HMRC Draft PAYE regulations