A recap for UK Recruitment Agencies on HMRC quarterly reporting requirements.
Following some meetings with prospective clients over the past month, its clear that not all UK recruitment agencies are 100 per cent clear on exactly what is needed by HMRC, why, and importantly what the penalty will be for non-compliance.
There are automatic penalties for non-compliance. For late reports or failure to submit a report, these start at £250 for the first offence and rise to £500 for the second and £1,000 for the third. After a full year of compliance the clock is started again. There are also manual penalties for inaccurate or incomplete reports.
It is up to the agency to make a report. No reminders or requests will be issued by HMRC.
I searched around for the best article I could on the topic to help recruiters get a simple understanding of the matter, and allow them to take corrective action where necessary.
To start, UK recruitment agencies are required to submit a report to HMRC every three months providing details of workers they have supplied and any payments made to them. Starting back in April, the first report was for the period 06/04/15 to 05/07/15 and needed to reach HMRC by 05/08/15, and the reporting requirements follow that cycle, so be ready and prepared... Q2 submissions deadline is 05/11/15 and remember that all reporting must be submitted online and on time, as to avoid fines.
On 12 February 2015, HMRC issued guidance on why the new regime was introduced and what it means for intermediaries, workers and clients. This followed a technical consultation last year to which we responded through meetings and then formally in TAXREP 61/14, with HMRC publishing a response document in January 2015.
This guidance explains what intermediaries are for this purpose and what they need to do.
HMRC has also published a template for making these reports and instructions on how to use it.
Which intermediaries are affected?
In broad terms, an intermediary for these purposes is an agency, which:
- Has contact with a client, and
- Provides more than one worker's services to that client because of the intermediary's contract with that client, and
- Provides the worker's services in the UK - or if the services are provided overseas, the person is resident in the UK, and
- Makes one or more payments for the services (including payments to third parties).
Please note that his is not the same as the definition in the Employment Agencies Act 1973, with which many agencies will be familiar. It is more widely drawn and some businesses may fall within the reporting requirements which are not technically covered by that Act.
Details of workers supplied and payment details for them are required only when the intermediary does not operate PAYE on the payments. This includes overseas workers resident in the UK and payments where the worker is working in the UK. However, no report under these rules is needed if the workers who are supplied provide their services at sea in the oil and gas industry wholly on the UK continental shelf.
There are reduced reporting requirements for an intermediary where the payments have already been included as part of a PAYE RTI submission by any other organisation.
One person limited companies, or personal service companies (PSC), that supply a client with only one worker do not have to send reports to HMRC. If the worker is supplied via an intermediary, then that worker will be included in the return of the intermediary that has the contract with the end client. However, if a PSC supplies more than one worker, including any subcontracted workers, then it will be acting as an intermediary and will have to send reports for each reporting period.
These reporting provisions do not apply to workers who are employees of the intermediary or who meet the conditions for being an agency worker described in HMRC’s guidance on agency and temporary workers at ESM2034 effective from 6 April 2014, because in respect of these payments the intermediary should apply PAYE and submit PAYE Real Time Information (RTI) returns.
In very brief terms, the agency worker rules referred to in the previous paragraph (and the requirement to apply PAYE) apply if all the following conditions are met:
The worker personally provides services to the client, and
There is a contract between the client and the agency and in consequence of that contract the worker’s services are provided, or the client pays for the services, and
The worker is subject to supervision, direction or control as to the manner in which they provide their services, and
Remuneration receivable by the worker does not constitute employment earnings unless the agency rules are applied.
Original Source for this article was from “New reporting requirements for ‘intermediaries’ who supply workers” by ICAEW on 23.02.2015 12:44