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A new rule came in from 6 April 2015 requiring employment agencies and intermediaries to submit quarterly returns to HMRC where they supply any worker who personally provides services to a client and PAYE has not been applied.

The first quarterly return is due on 5 August 2015 covering the period 6 April to 5 July 2015. The penalties for not complying are £250, £500 and £1,000 for the first, second and third or later offences respectively in any 12 month period.

For these purposes an employment intermediary is a person who makes arrangements under or in consequence of which (a) an individual works, or is to work, for a third person, or (b) an individual is, or is to be, remunerated for work done for a third person.

Therefore an employment intermediary can include but is not limited to an employment agency, a managed service company or an umbrella company. However, businesses which do not operate in the recruitment sector could also be caught. For example, where a personal service company provides more than one worker to a client this would also require a return to be submitted. In addition, professional partnerships should also beware because where a partner of a firm is seconded to a client the current rules require a return to be submitted.

The first step is to understand when a worker is ‘personally providing services’. Broadly, if the worker is working for the client and is under the client’s management and control they will be personally providing services to the client. However, if they are under the supplier’s management and control then they are likely to be working for the supplier rather than personally providing services to the client.

The information that is required to be collected for the return includes full name, address, postcode, national insurance number and Unique Taxpayer Reference(if the individual self-employed or a member of a partnership). Businesses will therefore need to ensure they have adequate procedures in place to collect this information.

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Aaron Hemmington is a Tax Manager based in the Northampton office and specialises in providing tax planning, advisory and compliance services to owner managed businesses across a variety of sectors. For more details and advice, please contact Aaron on [email protected] or 01604 645 600. You can also follow Aaron on LinkedIn.

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