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Budget 2014

Posted by phillip | Posted in Agency | Posted on 19-03-2014

New ‘false self-employment’ legislation

The 2014 budget sets out changes to the agency legislation that comes into effect on 6 April 2014.

What are the main changes?

Agencies will be responsible for ensuring that the worker supplying the service is paid under PAYE unless:

  • the worker is neither controlled, directed nor supervised by any third party OR
  • the worker is paid through a bona fide Personal Service Company (‘PSC’)

This will be the case where the agency is contracting with the end client (ie the user of labour), regardless of the use of any intermediaries.

Where agencies either pay workers as self-employed or engage through intermediaries that do the same, the agency will become liable for the unpaid tax, NIC, penalties and interest.

Agency workers will be presumed to be ‘controlled’ by others unless proven otherwise. Workers will be ‘deemed employed’ where there is control, direction or supervision by any person in the contractual chain.

Agencies will also have to report details of all worker payments to HMRC.

To stop attempts at avoidance, the definition of ‘agency’ will be much more widely drawn as ‘the party who holds the contract with the {end} client.

What should agencies do now?

The simplest path to compliance and to minimise risk, is for agencies to engage workers directly on their own payroll. Redego provide a fully-outsourced specialist temporary worker payroll service for agencies.

Alternatively, agencies should ensure that every umbrella company they contract with is fully-compliant (most importantly, based in the UK where all worker payments are PAYE). Redego has always paid all its workers through PAYE and will now also provide the new reporting data required under the legislation, directly to agencies.

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