Why the new legislation was introduced
Updated 26 July 2019
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This publication is available at https://www.gov.uk/government/publications/employment-intermediaries-reporting-requirements/why-the-new-legislation-was-introduced
1. Background
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 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.
2. What the regulations will do
The Income Tax (Pay As You Earn) (Amendment No. 2) Regulations 2015 give HMRC information that enables it to decrease false self-employment and abuse of offshore working. This will help HMRC to:
- support intermediaries that comply
- penalise intermediaries that do not comply
- make sure the right tax and National Insurance is paid by people working through intermediaries
- reduce unfair commercial advantage
HMRC does this by making certain intermediaries provide details of the workers they supply, and the payments they have made to those workers, where they did not operate Pay As You Earn (PAYE).
The intermediary must upload and send HMRC a report that contains the information once every 3 months using an online service.