HMRC Employment Intermediaries

HMRC Changes to Reporting Requirements for Employment Intermediaries

5 February 2015

Following responses to the HMRC consultation on the Reporting Requirements for Employment Intermediaries it has issued the findings and in response to these some amendments to the reporting requirements.

The reporting requirements have been introduced in a bid to reduce tax avoidance from self-employment and from UK workers working at UK Companies through Offshore Companies.

Respondents to the consultation highlighted that small and medium sized businesses could struggle with the extent of information requiring reporting and also that some of the information requested was unnecessary and difficult to obtain especially when a number of businesses were involved in the supply chain.

Respondents also questioned the extent to which Personal Service Companies (PSC’s) would be required to report.

In response to these concerns HMRC has reduced the requirement for the following information to be supplied:

Worker title, hours worked, passport number, National Identity Card Number and, where a NINO (national Insurance Number) is provided, the need to report Date of Birth and gender.

The regulations have also been changed so that, although HMRC require details of employed workers (other than those of the intermediary with the filing obligation), they only require the intermediary to tell them about payments for the self-employed workers and others they have engaged where PAYE has not been operated including those engaged through offshore intermediaries.

The requirement for providing nil returns has also been reduced from 3 years to 1 year.

In respect of offshore intermediaries, the requirement to complete a return will fall on the intermediary in the UK closest to the client and requires them to tell HMRC about workers they are supplied with including from any offshore intermediary. An intermediary outside the UK is outside the UK tax jurisdiction for this - although if they are supplying workers to a UK client, without a UK intermediary, that client can have reporting and tax obligations under existing tax legislation.

In respect of PSC’s, where the PSC has only one individual providing services to an end client the PSC will not be a specified intermediary and will therefore have no filing responsibility. A PSC however will appear on a different intermediary’s return where their services have been provided by that intermediary to an end client. If the PSC subcontracts to another PSC or where more than one worker of the PSC provides services to an end client they will be caught by the legislation as a specified employment intermediary and would need to file a return.

HMRC have also issued the detailed layout of the format that will be required for software developers (issued 3rd February 2015):