False self-employment was one of the issues which the previous government was especially keen to tackle in order to prevent unscrupulous employers from being able to avoid taking any responsibility for providing employee benefits whilst also saving money on employer’s National Insurance. To this end, new rules were introduced that require agencies which comply with reporting rules which are designed to make it more difficult for employers to take on staff who are effectively employed but have to shoulder the risk and disadvantages of self-employment without any of the benefits.
These new rules will come into effect next month, on the 5th of August, so agencies and intermediaries will need to ensure that they understand their responsibilities under the new legislation. This is particularly important as originally HMRC had informed agencies that the date by which employment intermediaries needed to report details of the workers involved by November 2014. This initial deadline was scrapped when it became apparent that the 2014 deadline was unrealistic given the enormity of the task as far as agencies were concerned, both in terms of cost and the fact that new IT systems would need to be implemented in order to provide the necessary information. There was also concern that the HMRC itself might have trouble processing the amount of data provided under the new rules.
The department has reminded intermediaries that they will need to register with HMRC online services in order to submit a return, and any organisation that is uncertain as to whether they are required to do so can consult the guidance they have provided to clarify who needs to comply.
In general, any agency or intermediary which supplies two or more workers to a client, in situations where they are not already operating PAYE, will be required to report to HMRC with details of the payments that they have made to those workers. Their report will also need to include personal details for the individuals involved such as their full name, address, and details of the work arrangements as well as the payments made.
Those agencies who pass on this information to another intermediary will not need to report directly to HMRC provided they are supplying the relevant information to the intermediary which has direct contact with the client. It is the business which is involved in the direct supply of staff to a client that needs to report to HMRC, so any company that is in doubt as to their status should check in good time to meet the deadline should they need to file.
If you are considering self-employment, either as a contractor or a freelancer, then you might find the various ways of working a little confusing. You can use our take home pay calculator to work out what you might be earning depending on which way you choose to operate, or for specific advice for your situation you can call us on 01253 362062 or email us at firstname.lastname@example.org.