New agency rules

HMRC have published guidance on the changes to the treatment of workers supplied through UK based agencies or other intermediaries, which should be considered when workers are supplied, through a third party, especially if supplied on a self-employed basis say Harris & Co accountants Northampton

The legislative changes, effective from 6 April 2014, were introduced to prevent the use of employment intermediaries to avoid National Insurance contributions (NICs) and income tax by presenting employment relationships falsely as self-employment.

The guidance outlines when the new legislation applies to workers and when it does not. It defines ‘supervision, direction or control’, the criteria to determine whether a worker will be treated for income tax and NICs as an employee.

The guidance addresses questions such as when a worker should de-register from self-assessment or the Construction Industry Scheme (CIS); the effect of the new rules on CIS registration for agencies and on workers working through an umbrella company; how the new rules interact with the intermediaries legislation; and the consequences of an agency treating a worker as self-employed when they should have been taxed as an employee.

The guidance is available from HMRC.

Detailed guidance on the changes to the Agency legislation is contained within the HMRC Employment Status Manual.