Onshore Employment Intermediaries

April 6th is a date to be put in the diary, highlighted, and then underlined a couple of times for good measure. For this is the date amendments to the Agency Legislation will be introduced, guaranteeing significant changes for Employment Intermediaries.

HM Revenue & Customs have long suspected businesses and intermediaries taking unfair advantage of current legislation, and are therefore enforcing changes to combat this concern.  

The government’s intent to legislate against the issue of false self-employment was detailed in 2013’s Autumn Statement, with employment intermediaries receiving the majority of the spotlight.  

HMRC estimate around 200,000 workers in the construction sector and a further 50,000 in others are being concealed as self-employed, largely due to a bogus right of substitution.  It’s therefore generally suspected that workers within the construction, catering and security sectors will be the first focus points of the customs once changes have come into effect.

In order to combat this issue, HMRC propose to amend the current Agency Legislation contained in Chapter 7, Part 2 ITEPA 2003.

As it currently stands, agencies have always been able to provide workers to end users on a self-employed basis. However, this is only legitimate if the worker concerned is not under any obligation to personally provide their services, and they are not subject to – or to the right of – supervision, direction or control concerning the manner in which their services are provided. Simply, the worker should have autonomy over the way they provide their services.

But succeeding the consultation, the requirement for personal service is expected to be made redundant, leaving only the right of control as the main factor to decipher the legitimacy of a self-employed individual.

From this time, there will be a presumption that there is a degree of control over a worker engaged by or through an employment business, and it will be the responsibility of the employment intermediary to prove otherwise.

If it is found that an individual is actually not legitimately self-employed, the agency will be responsible for the deduction of PAYE and NIC.

In addition, as of 6th April, employment intermediaries and agencies will be required to submit simple, quarterly electronic returns, containing details of any individuals unaccounted for through Real Time Information (RTI).

Furthermore, employment businesses will be obligated to keep extensive personal details of their self-employed workers as set out in 6.6 of the consultation document.

Qdos Contractor recognises the looming concerns regarding these imminent changes and is renowned for providing comprehensive solutions.

Expert consultants and ex-revenue inspectors accommodate the team to provide unparalleled advice for any individual, intermediary or agency concerned.

There are also many defences and solutions that can be adopted to ensure reduced risks and worries. One of these is the Tax Risk Protection. For Employment Businesses wanting to protect their position in light of the imminent amendments to the Agency Legislation, Qdos’ Tax Risk Protection Package is the ideal solution and is designed to provide the best possible chance of a successful defence.

Another defence well worth utilising is the Public Sector IR35 Solution. As the public sector is highly expected to be a main concentration of HMRC, a logical step would be to set certain precautions in place. This solution includes a detailed review of a written contract, working practices and Business Entity Test. Once a status has been decided, a certificate pack will be issued that can be forwarded to the employment body or agency.

Another option provided Qdos is their IR35 defence pack. This includes:

  • A detailed review of your written contract(s) (up to 3), with suggested amendments if necessary
  • Comprehensive review of working practices, (which can be conducted over the telephone with one of our experienced IR35 experts if required)
  • Review of business entity test, with suggestions on how to increase score
  • Discount code to use on IR35/tax insurance policies
  • If reviews are successful, either first time or following amendments, we will compile a certificate confirming our opinion of your 'outside of IR35' status.
  • We will put together a Confirmation of Arrangements Letter, for submission to your end client to sign, based on your responses to the working practices questionnaire
  • Qdos will liaise with the agency/end user if required

Qdos have handled over 1,300 IR35 enquiries on behalf of contractors and are recognised as one of the UK’s leading authorities on status issues.

By:Sam Greenwell

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