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New reporting requirements for employment agencies
2 October 14 | By: Jas Jhooty
On 1st October 2014 HMRC published draft new legislation that will require employment intermediaries (agencies) to report specific information to HMRC about themselves and any workers they have been involved in the supply of to end clients, where the workers have been treated as self-employed for income tax and National Insurance purposes and paid outside of PAYE.
In the Autumn Statement 2013 the government announced they would tackle the use of employment intermediaries to facilitate false self- employment of workers in order to avoid employment taxes.
A period of consultation followed (10 December 2013 to 4 February 2014) which set out the government’s intended changes to strengthen the existing Income Tax and National Insurance legislation, commonly known as the “Agency Legislation,” which can apply to employment arrangements involving employment intermediaries (agencies) when certain conditions are satisfied. The consultation was titled Onshore Employment Intermediaries: false self employment.
The following information is required to be submitted by the employment intermediary (agency) from April 2015.
About the Agency making the return :-
- employers PAYE reference number
About the self-employed Agency worker:-
- full name
- full name
- date of birth
- national insurance number (if the individual has one),
- Unique Taxpayer Reference (where self-employed or a member of a partnership),
- passport number (if the individual does not have a national insurance number) or national identity card number (if the individual does not have a national insurance number or passport),
- the date on which the individual began providing the services
- the date (if any) on which the individual stopped providing the services
- the number of hours worked by the individual for each client in the tax quarter
About payments made by the Agency for services provided by the Self-Employed Agency worker: –
- in respect of the person receiving the payment the person’s full name (if the recipient is a registered company their company name or if they are a partnership the name under which they are trade), and address
- the total of the payments made by the specified employment intermediary to the person in the tax quarter
- the reason why the specified employment intermediary has not deducted income tax from those payments
- where the reason is that the payments made are to a limited company the company registration number of that company
- whether the payments included amounts in respect of VAT
From April 2015, the employment agency has to report this information to HMRC electronically within 30 days of the end of the following quarterly dates: -
- 5th July
- 5th October
- 5th January
- 5th April
There is also a time limit for any amended returns being 30 days after the following quarter in which a return was made.
Retention of records
Supporting records have to be retained by the employment agency for at least three years after the end of the tax year to which they relate.
How emTax can help
Employment agencies must now ensure that they have the systems in place to be able to provide this information to HMRC from April 2015 onwards. Our consultants can help you to get these systems in place and can also advise you on the current strengths and weaknesses inherent in your current procedures in relation to the engagement and supply of agency workers.
If you are an employment agency and you require any more information of how these changes will affect your business, please do not hesitate to contact us.