06.11.14 HMRC Launch Consultation on Employment Intermediaries: Reporting Requirements

Following the Onshore Employment Intermediaries Agency Legislation that was introduced in April 2014, HM Revenue and Customs (HMRC) have published the reporting requirements that will come into effect from 6 April 2015 in the form of a draft statutory instrument; Draft Statutory Instrument – the Income Tax (Pay As You Earn) Regulations 2003.  The draft regulations are published for external comment

The draft regulations discuss the information that employment intermediaries will need to send to HMRC from July 2015. Notably, the draft legislation rests the responsibility for the return with the employment intermediary which in a standard agency/umbrella arrangement will be the agency.  The content of the report is extensive and as well as the personal information for each individual, includes all payment detail, information which will be held by the umbrella company rather than the agency.  The ramifications of the vast extent of the information content and the necessity to pass information throughout the supply chain will be extremely onerous.  Recruitment businesses may want to give their opinion on this and the serious effect that it will have on their company.

Each tax year is divided into 4 reporting periods during which HMRC must be sent reports that contain details of all workers and any payments which were not paid via PAYE. HMRC must be sent a report if at any time during a reporting period the agency;

• Has more than 1 worker provide their services to a client because of a contract with 1 or more clients;
• Provided the workers’ services in within the UK; and
• Did not treat 1 or more of the workers as employees because nobody had the right to supervise, direct or control how they did the work.

The first report is due from 6^th July 2015 (covering detail for the period 6^th April to 5^th July) with a deadline for submission of 5 August 2015. The reports must be created using HMRC’s report template (which the employment intermediary will need to download) and there will be an online service to upload and send reports. Information in the report will include;

• Company name, address, postcode and PAYE reference;
• The start and end dates of the reporting period;
• The worker’s personal details;
• The engagement and payment details; and
• Each worker’s full name, personal details, how they were engaged and how they were paid.

The deadline for submission of reports will be 30 days after the end of a reporting period. If  reports are late, incomplete or incorrect penalties will be issued.

Reports must continuously be sent to HMRC until HMRC are notified the company is no longer an employment intermediary or the conditions for sending a report haven’t been met for 3 consecutive tax years.

Information must be kept to record that what was sent to HMRC was correct for at least 3 years after the end of the tax year that they relate to. This may include documents that show the worker wasn’t, or couldn’t be, supervised, directed or controlled.

The information within the draft legislation is subject to change pending the outcome of the period for external comment which ends on 25 November 2014. View the Gov.UK information on the new process here. View the draft regulations and information regarding the facility for external comment here.