ESM2110 - Employment Intermediary Reporting: Meaning of Specified Employment Intermediary- Personal Service Companies (PSCs)
Regulation 84E Income Tax (Pay As You Earn) Regulations 2003
Income Tax (Pay As You Earn) (Amendment No.2) Regulations 2015
Agencies will often contract with a Personal Service Company (PSC) to supply a worker to the client of the agency. The agency will have to make a return to HMRC if it makes a payment to (i) the worker, (ii) the PSC, or (iii) any third party - in connection with the services provided by the worker and supplied by the PSC. In this situation, it is the agency and not the PSC that must make the information return.
PSCs themselves do not normally have an obligation to send HMRC the information return. This is because they usually supply a client with the services of one person - the owner/director of the PSC.
However, if a company/PSC supplies more than 1 worker, (including any subcontracted workers) to a client and this was not through an agency, then the PSC itself is a Specified employment intermediary and must submit a completed information return to HMRC.
Examples of PSC Responsibility
- End Client contracts with PSC1 to provide services.
The services are personally performed by the one PSC director. There is no filing responsibility under the legislation and the PSC is NOT a specified employment intermediary.
- End Client contracts with PSC1- that subcontracts to PSC 2.
PSC1 is now the specified employment intermediary and must provide details of the PSC 2 workers, the PSC2 name and address and the amount of the payment paid to PSC2 i.e. what PSC1 agrees to pay PSC 2 which is not what the director of PSC2 actually receives
- PSC supplies client with workers and no agency involved.
If the PSC pays the workers for the services they have provided to the end client and operates PAYE/RTI when making those payments, then the conditions at 84E (d) are not met and the PSC is not a specified employment intermediary for the information reporting purposes.
However, if the PSC pays the workers without deduction of PAYE/RTI, the PSC will be a Specified intermediary and will need to complete the information return, which along with providing the worker details, must provide the reason why PAYE was not operated.