The new reporting requirements by HM Revenue and Customs in relation to agencies that employ workers who are not employed through the agency’s Pay As You Earn scheme are now in force. If you would like to speak to us about this please Contact us here.
What is Employment Intermediaries Reporting?
An employment agency (intermediary) must provide worker’s details and payment details on a quarterly basis to HMRC for workers where it hasn’t operated PAYE.
Why was the new legislation introduced?
Working trends have changed in recent years and many people use an employment intermediary to help them find work.
There are different types of intermediaries, the most common are employment agencies. These provide people with regular work and give them the flexibility to accept or decline work as they wish. Businesses increasingly use intermediaries to get skilled staff at short notice for temporary engagements, so employment intermediaries play an important role in contributing to the UK economy.
In recent years HM Revenue and Customs (HMRC) has seen increasing evidence of growth by some intermediaries:
- helping to create false self-employment
- supplying UK workers from an offshore location
Both of these methods have been used to reduce employment taxes and avoid having to fulfil their legal employment rights and obligations.
What will the regulations do?
The regulations will give HMRC information that will enable it to decrease false self-employment and abuse of offshore working. This will help HMRC to:
- support intermediaries that comply
- penalise intermediaries that don’t comply
- make sure the right tax and National Insurance is paid by people working through intermediaries
- reduce unfair commercial advantage
HMRC will do this by making certain intermediaries provide details of the workers they supply, and the payments they have made to those workers, where they didn’t operate Pay As You Earn.
The intermediary will have to upload and send HMRC a report that contains the information once every 3 months using an online service.
What does this mean for a recruitment agency?
From 6 April 2015, intermediaries must return details of all workers they place with clients where they don’t operate Pay As You Earn (PAYE) on the workers’ payments. The return will be a report (or reports) that must be sent to HM Revenue and Customs (HMRC) once every 3 months.
If you only introduce workers to clients or supply workers to other intermediaries, and you aren’t involved in any arrangements that follow, you don’t need to send HMRC reports.
You will need to send a report to HMRC if at any time in a reporting period you:
- are an agency
- have a contract with a client
- provide more than one worker’s services to a client because of your contract with that client
- provide the worker’s services in the UK - or if the services are provided overseas, that the person is resident in the UK
- make one or more payments for the services (including payments to third parties)
If the workers you supply provide their services at sea in the oil and gas industry wholly on the UK continental shelf, you don’t need to send HMRC reports.
You will need to provide the worker’s details and payment details for workers where you don’t operate PAYE. This includes overseas workers and payments where the worker is working in the UK or working temporarily abroad.
You don’t have to include any details of workers who are your own employees.
You don’t have to include any payment details where the payments have already been included as part of a PAYE Real Time Information (RTI) submission by any other organisation.
How do you send these reports to HMRC?
Following the end of the first reporting period from 6 April to 5 July 2015 you will have until 5 August 2015 to send your first report to HMRC.
You must use HMRC’s report template to create the reports. HMRC will provide an online service for you to upload and send your report.
The service will use your PAYE reference and Accounts Office reference from when you sign in to the service as part of the report.
When you use the service, you’ll have to state that the information in the report is correct before you can send it to HMRC.
Deadlines and Penalties
You must send HMRC your report, or reports, by each reporting period’s deadline or you may receive a penalty. The reporting deadlines can be found on HMRC’s website.
If your report is late, incomplete or incorrect you may be charged a penalty.
New automatic penalties have been introduced for not sending a report or for sending a late report. These are given based on the number of offences in a 12-month period. These are:
- £250 - first offence
- £500 - second offence
- £1,000 - third and later offences
If there are 12 months or more between offences, you will only be charged £250 for the first offence in the new 12-month period.
Where there is continued failure to send reports or send reports late you may receive a penalty every day that you don’t send a report.
What information does the report need to contain?
The quarterly report will need to contain the following:
- Worker’s full name
- Worker’s date of birth
- Worker’s gender
- Worker’s National Insurance Number
- Worker’s full address including post code
- Worker’s type (e.g. Limited Company, Self Employed, Paid through Umbrella Company)
- Worker Unique Tax Payer Reference (if applicable)
- Start and end date of the worker’s engagement
- Amount paid for worker’s services
- Currency of the payment to the worker
- Whether the amount paid was or was not inclusive of VAT
- Companies House Registration (if applicable)
- Details of Recruitment Agency including name and address
The full details of this new legislation can be found on the following web link:
What can we do to help?
We know through our Payroll Finance service that not all agencies have the time or resource to provide the level of reporting required by HMRC for the Employment Intermediaries Reporting. For a small fee of £2.50 per worker per pay frequency, we can build the HMRC report in the csv format on your behalf and release to you ready to submit to HMRC before the deadline ensuring you are compliant with HMRC and not at risk of incurring any penalties.
If you would like to sign up for our new Employment Intermediaries Service, or have any questions regarding this service, then please contact Lisa Barford on 01908 268871 or by email here. We can also support you with Auto Enrolment responsibilities and to find out more click here