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News & Blog

HMRC and compliance in the recruitment industry

Posted: 30th October 2015

The government and HMRC have been introducing new legislation at a rate of knots, aimed at the contracting sector of employment. Onshore and offshore intermediaries being some of the most recent.

This change is now about policing those new rules. To put it simply, HMRC wants to understand how everyone is paid, to start policing the unscrupulous operators in the market.

Loans schemes and EDMs are on the radar for HMRC, as well as offshore umbrellas.

Recruitment agencies will be required, on a quarterly basis, to provide details to HM Revenue & Customs 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 NI purposes and paid outside of PAYE.

But according to HMRC’s revised reporting requirements, it means agencies (as ‘intermediaries’) will, in the same quarterly record on workers they provide to the end-user, also report the details of those who operate via an external PAYE umbrella company.

The net payments to workers won’t have to be disclosed to HMRC by the agency (as that information is provided by the umbrella company via their RTI submissions).

The ‘long and short of it’ is that agencies are soon going to be required to obtain information from candidates and report it to the Revenue, whether those workers are not on PAYE; are employed through someone else’s PAYE or engaged through a PSC.

The cherry on the top of this very widely targeted data grab by HMRC is that the new quarterly returns, in which the information on the workers will be fed, will be backed up by a penalty regime. This will be put in place to ensure incorrect returns are punished and, for HMRC, monetised.

EAFS work with recruitment agencies and corporates from across the globe in order to place contractors and freelancers compliantly in Europe and beyond, giving both the agency and the contractor peace of mind that they are fully compliant and their employment contracts and tax affairs are in safe hands.

Contact us for advice on any aspect of UK or European employment compliance.

Gary Neill
European Sales Manager
0131 526 3300

Business Comment

Business Comment is the Edinburgh Chamber of Commerce’s bi-monthly magazine. It provides insight on Edinburgh’s vibrant business community, with features on the city’s key sectors, interviews with leading figures and news on new business developments in the capital.
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