Employment intermediates, most commonly through personal service companies (PSCs), link workers with end clients on short contracts. This notion allows workers to be more flexible while still supporting corporate growth and the UK economy. However, due to the rise of employment intermediaries and fraudulent self-employment, income tax and NIC are frequently not paid. In April 2015, the government made it necessary for employment brokers to provide information on their non-PAYE employees to HMRC in quarterly reports in order to assist solve this issue. The new reporting obligation is accompanied with a penalty scheme for reporting that is late, incomplete, or incorrect.
We can assist you with reporting if you have any intermediate reporting needs. The UK statute requires recruiting companies to record all assignments placed with employees to HMRC, as has been shown in multiple situations. If the workers are on an agency payroll, RTI reporting should be used to provide weekly reports to HMRC (if payment is made weekly). However, if the workers are paid through another method, such as a PSC, CIS plan, or umbrella, the payment must be reported to HMRC on a quarterly basis.
What is an Employment intermediary?
An intermediary is someone who arranges for someone to work for a third party or pays for services performed for a third party. An agency is also a phrase used to describe an employment mediator. In circumstances where the intermediary does not use Pay As You Earn (PAYE) on the employees’ payments, intermediaries must return information on all workers they arrange with customers. At least once every three months, you must submit the report (or reports) to HMRC. The frequency with which you upload and submit reports is up to you and your intermediaries. Depending on how they function, this might be done weekly, monthly, or once per period.
Why was the Employment intermediary rules introduced?
The government has unveiled laws to push down on the use of ‘fake self-employment’ models, in which employees and employers avoid paying taxes while abdicating other obligations.
To Whom does Employment intermediary rules affect?
The rules went into effect on April 6, 2014, and they apply to the following:
- Self-employed contractors who are currently liable to self-employment taxes and are employed through ‘intermediaries.’
- Companies that serve as ‘intermediaries.’
Information HMRC will ask you to process employment intermediaries reporting
The crucial information that HMRC will need from you to process the reporting is listed below. This will only make your life easier and more enjoyable.
Details of Employment intermediaries
- UTR number of your agency.
- NI number
Details of worker engagement
- Start and end date of assignment
- Payment details (including VAT)
Almost all agencies are required to have access to this information. Because the workers are not directly paid by them, the only information they may lack is the NI number. Because we have contracts with our employees, we are allowed to provide information to government entities.
The data is downloaded in the same format as that requested by HMRC, making it easier for us to deliver the data they want. The quarterly information report can be retrieved at any time and double-checked before being sent to HMRC.
What does a business need to consider?
The following factors must be considered by businesses:
- Do they use non-employees (subcontractors) to complete client contracts?
- Are employees paid without PAYE and NIC deductions?
If you answered yes to either of these questions, you could be labelled as an intermediary. Employment agencies, umbrella businesses, and some payroll organizations are examples of intermediaries. This is, however, a pretty wide term.
If any of the following circumstances exist at any stage during a reporting period, you must submit an Employment Intermediary Report to HMRC (quarterly). If you are –
- Are a type of agency or middleman that provides a customer with the services of individuals.
- Have a contract with one or more clients.
- As a result of your contract with those clients, provide the services of more than one worker to one or more clients.
- Deliver the worker’s services in the United Kingdom – or the individual is a UK resident if the worker’s services are offered elsewhere.
- Make a one-time or multiple-time payment for the services (including payments to third parties)
Consulting service organizations, facilities management firms, the events industry, the hotel sector, the care sector, and the audio-visual industry are all examples of enterprises that supply personnel to other companies. It also covers personal service organizations that outsource and/or provide many workers to a customer.
You must submit a ‘nil report’ by the required date if you did not supply staff for a given quarter.
If PAYE is not utilized, the intermediary who distributes the employees to the client is responsible for completing the report with HMRC if there are several intermediates in the chain. If an intermediary sends employees to another intermediary, the information on the workers must be sent to the other intermediary rather than HMRC.
Who doesn’t it include?
The intermediary is required to disclose to HMRC if it does not run PAYE for the workers. This report must include information on foreign employees who are liable to UK tax or payments made while providing services in the UK or temporarily abroad.
The report does not need specific information from employees who:
- In the United Kingdom, you are not compelled to pay tax.
- Workers who work for you.
- During a reporting period, you are unable to obtain job or are not compensated.
- Unless the client’s services and work necessitate it, deliver their services entirely from their own home or non-client-managed premises.
- Are models for fashion, photography, or art, or are actors, singers, musicians, or other entertainers.
Firms that offer a customer with a single worker, such as limited companies or personal service companies, are not needed to file a report. However, if a personal service firm employs more than one person and is not registered for PAYE, it is required to file a tax return with HMRC.
Reporting periods and submission deadlines for Employment Intermediaries Reporting
The chart below will help you grasp the crucial reporting dates as well as the deadlines. If you work in agency recruiting, you should be aware of these dates.
|Reporting Dates||Deadline Dates||Date to Replace the Report|
|April 6 to July 5||August 5||November 5|
|July 6 to October 5||November 5||February 5|
|October 6 to January 5||February 5||May 5|
|January 6 to April 5||May 5||August 5|
You can contact us or send us an email with your requests if you need any assistance with intermediaries reporting. Within 24 hours, you will receive a response from our staff. We are continually trying to enhance the process and make life simpler for our employees by removing roadblocks.
What penalties may you face if you are late in sending reports?
If a report is late, penalties are automatically applied based on the number of late reports received over the course of a year:
- For a first offence, the fine is £250.
- A second offence will cost you £500.
- Each subsequent offence is punishable by a £1,000 fine.
The penalty clock resets after 12 months of late reporting, but chronic failure to submit reports on time can result in extra fines of up to £600. The intermediary has the opportunity to appeal erroneous fines to HMRC.