The new tax year has brought new opportunities for pension withdrawals, and new burdens for engagers of self-employed workers, as we explain in this week’s tax tips newsletter. We also highlight new VAT-MOSS guidance from the EU and look at how someone can deregister for VAT.
A new quarterly reporting requirement came into force from 6 April 2015 for agencies and employment intermediaries. It is designed to provide HMRC with information on who is working as “false self-employed” or through off-shore agencies, but the regulations could catch many businesses who don’t think of themselves as employment intermediaries.
The Income Tax (Pay As You Earn) (Amendment No. 2) Regulations 2015 (SI 2015/171) define an intermediary for this purpose as: “a person who makes arrangements under or in consequence of which an individual works for a third person or if an individual is remunerated for work done for a third person.” This could apply to any contractor company in many industry sectors, including construction or security.
There are exceptions in the regulations which exempt the contractor company from the reporting requirements if:
· it does not provide more than one person’s services to a client; or
· those persons are all its employees; or
· it applies PAYE to the pay of the workers it places with clients.
Thus one-person personal service companies (PSC) don’t have to a worry about this new regulation, but if the PSC engages a substitute who is not an employee a reporting requirement may kick-in.
The definition of an agency in the regulations is very broad: ”a person other than the worker, the client or a person connected with the client”. This could catch almost any business where there is another client in the contractual chain, even an organisation that connects clients with tax advisers for specific pieces of work.
The contracting company which has the potential to be deemed to be an “agency” for these regulations needs to show it is the “client” for the services it commissioned, rather than an agent, in order that the reporting regulations do not apply.
Our employment tax experts can help you decide if these new reporting regulations apply to you or your clients.
This is an
extract from our tax tips newsletter dated 9 April 2015. The newsletter
itself contained links to related source material for this story and the
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