Agencies and false self-employment

On the back of the Autumn Statement, HMRC has issued a consultation to establish agencies (the first in the chain) as responsible for the worker’s tax and national insurance contributions, in a bid to end false self-employment.

Will this get traction? Well I think so.

Reading through the consultation document, the intent is clear. While this will heap yet more administration onto agencies it will provide HMRC with a clear understanding of who is contracting and using which model – for the very first time.

The mechanics of it are now becoming clear – the agency will have to submit a quarterly return, similar to RTI submissions. This will identify who is doing what. HMRC can then put together a summary of each provider and investigate those models promoting 85/90% returns. About time too!

What is good and encouraging is that PSCs and Umbrellas are clearly outside this scope and workers using these models will not be targeted.

So for agencies, having a PSL of compliant providers becomes even more important, especially as HMRC is looking to “transfer” any HMRC debt to the agencies should the providers not cough up…

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A positive spin on the autumn statement

With the growth forecast increased and borrowing revised down, everything looks rosy for the government. A drive to enable the public to share in the remaining privatisation of RBS next year also indicates that a general election must be right around the corner.

However, what about the details for our industry? Well…

You’ll have seen reports of reactions to the government clamping down on onshore intermediaries to prevent them from using contracts to disguise employment as self-employment. This will impact contractors who currently receive their pay as gross – a scheme that popped up after offshore was investigated.

The Office of Tax Simplification has also been asked to release some more quick wins, specifically with travel and subsistence. More clarity and guidance will be provided to ensure we at last have a level playing field with limited companies and gross schemes.

From 2015 under 21s will get a tax exemption from employer’s national insurance, which will hopefully encourage employment for younger individuals. A welcome tax break I’m sure.

In my opinion, the autumn statement is a big win for the economy, umbrellas, and, from 2015, under 21s.

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