ESM10023 - off-payroll working legislation: Chapter 10, ITEPA 2003 (from 6 April 2021): basic principles: consequences of providing fraudulent information

Section 61V Chapter 10, Part 2 ITEPA 2003
Regulation 22 Social Security Contribution (Intermediaries) Regulations 2000

The fraudulent information provisions apply where a relevant person (see below) provides another person with any document designed with the purpose of avoiding the legislation. The provisions protect clients and deemed employers from having liability under the off-payroll working rules where they have acted in good faith upon fraudulent information given to them.

A fraudulent document is any document which has the intended effect of achieving a false position which shows:

  • the contract is not an engagement to which the legislation applies, or
  • that none of the conditions at ESM10003 are met.

Examples:

  • a document wrongly indicating the worker does not have an interest in the intermediary
  • evidence the worker provides to the client for them to consider within the status determination that is false.

In these circumstances the relevant person who provides the fraudulent documentation to any other person is treated as the deemed employer for the purposes of making the deemed direct payment. If it is the worker who is treated as the deemed employer, this applies even though the worker is treated as both the employee and the employer. In this circumstance the worker will be liable for tax, primary NICs and secondary NICs.

Relevant persons are:

  • the services-provider (the worker),
  • a person connected with the worker,
  • if the worker’s intermediary is a company, an office-holder of that company, and
  • a person in the contractual chain who is UK resident or has a place of business in the UK.

In situations where there are multiple relevant persons within the contractual chain, the relevant person who first provides the fraudulent documents to another person will be liable for the unpaid tax and NICs.

If a party unwittingly and in good faith receives fraudulent information and passes it further up the chain, they will not be responsible for tax and NICs by virtue of these provisions.