Help with an agency 'onshore employment intermediaries: false self-employment' form

[infosec]

Hi,

I'd appreciate any guidance with answering a questionnaire sent through by my current agency - I'm guessing it is to do with 'onshore employment intermediaries: false self-employment' but they kindly didn't mention it specifically.
These kind of things always stress me, so any advice gratefully received. On my last tax return I said I wasn't a PSC, I believe on the newer one I will have to say I am but operating outside of ir35 as its now 2 questions.

So as a Ltd company operating outside of ir35, what answers would be best for my delightful questionnaire which they will terminate my contract if I don't answer today ;-)

"A Personal Services Company is where a temporary worker works through their own company rather than indirectly for the employment agency. Please answer the following questions about your company:

1. Confirm that you see your company as a Personal Services Company: Yes/No
2. Have only one person that works as a Temporary Worker (it can have employees who do admin etc) Yes/No
3. That Temporary Worker must own at least 50% of the company Yes/No
4. That Temporary Worker must be a director of the company Yes/No

If you have answered no to any of the above questions, please provide further detail and submit your return now. There is no need to complete any more of the questionnaire and we will contact you shortly.
{else fill in a million questions about your 'PSC' and everybody who has anything to do with it}

I have emailed them asking if by PSC they mean inside or outside of ir35 - anything else I should question to cover myself before filling in with answers yet to be decided?

Thanks in advance ;-)

[TheCyclingProgrammer]

On what basis did you previously answer "No" to the PSC question on your self assessment? I realise some contractors prefer not to answer Yes to this as there is no legal definition of a PSC but according to HMRC's own definition a one-man contractor operating through a Ltd company would indeed be a PSC.

I would presume that the answer to all 4 questions is Yes. It would be for me and pretty much most contractors, unless they've split their company shares with a spouse in such a way that they have a minority shareholding.

PSC != inside IR35. Why do you think that might be the implication? Return it with Yes as the answer to each question and forget about it. The onshore employment intermediaries legislation shouldn't normally apply to a typical PSC, regardless of IR35 status.

[malvolio]

Agreed that a PSC is out of the scope of these regulations.

PCG has a briefing note that may assist them to understand their own business a little better...

[TheCyclingProgrammer]

Agreed that a PSC is out of the scope of these regulations.

PCG has a briefing note that may assist them to understand their own business a little better...

It sounds like OPs agency is simply trying to verify that OP is a PSC and therefore outside the scope of the legislation using the same tests that the PCG recommend in that briefing note. They've possibly not explained themselves very well though.

[infosec]

Thanks - worst agency I have ever dealt with in 20 years of contracting in 4 countries. They demand things with little explanation, takes weeks to change two words on a contract etc and send through forms with no information claiming new laws require all of the following information.... so I just don't trust their competency or judgement on anything ;-)

Thanks for the reassurance ;-)

[Martin at NixonWilliams]

We have seen many agencies asking some very odd questions lately, most of whom have confirmed that the questions are being asked in connection to the onshore intermediaries legislation - There seems to have been a knee-jerk reaction to the whole thing really and a lot of the questions do not make a lot of sense.

There is no statutory definition of a personal service company but this is not usually a question of whether you are caught by IR35. They just want to know whether your company is one that you provide a personal service through, as opposed to using employees etc.

I hope this helps.

Martin

[infosec]

Ok, I am, still slogging away at this at 11:12PM ;-)

The last question 19 seems to require a 'yes' to all of these - anything I should be aware of anything in here, seems pretty awful....?

Please confirm on behalf of your PSC, that:

- All remuneration received by the PSC Worker as a consequence of providing, or being involved in the provision of services, are subject to the PAYE and National Insurance Contributions regime and such Workers are registered within the UK tax system.

- Any income paid gross to the PSC Worker by the PSC (in addition to the remuneration for services referred to in clause 1 above) is paid as income from the Worker’s investment as a shareholder in the PSC and not as remuneration for services.

- The PSC is responsible for and shall account for PAYE and NIC Liabilities due to HMRC in respect of all remuneration made to the PSC Worker.

- The PSC shall provide all information reasonably requested by Agency_Name to verify compliance with these undertakings and submit to an audit inspection by Agency_Name at any time. The Supplier shall provide all reporting information in the format required to enable Agency_Name to meet its reporting obligations to HMRC.

- The PSC hereby indemnifies and holds harmless each Agency_Name Group Company against any losses, damages or other costs which that company may suffer or incur as a result of the Supplier, or its sub-intermediaries, failing to comply with the undertakings in this Addendum and any applicable laws or regulations. Agency_Name may deduct from payments due to the PSC any sums due under this indemnity or any unpaid Employment Taxes.

- The PSC Worker and the PSC understand that in the event that the PSC is unable at any time to satisfy Agency_Name that it is complying with the above undertakings, Agency_Name will not be able to continue to provide work-seeking services to the PSC Worker or to deal with the PSC.

[TheCyclingProgrammer]

They want you to indemnify them against their failures to correctly apply the legislation which doesn't apply to you anyway?

I know where I'd be telling them to stick their questionnaire and indemnity.

[malvolio]

They want you to indemnify them against their failures to correctly apply the legislation which doesn't apply to you anyway?

I know where I'd be telling them to stick their questionnaire and indemnity.

Precisely. Send them the PCG's summary and tell them the rules don't apply to you. (In essence you are not being paid directly on the basis of the work done for your client so your tax affairs are out of scope and the agency has no exposure to any risk of non-payment of taxes). If they protest, get them to phone REC or even the PCG.

Remember you almost certainly aren't dealing with anyone with authority (or a brain) but some box ticker, and it's not down to you to do their job for them. If they insist YourCo does, you will of course be charging them for your time at commercial rates...

[LisaContractorUmbrella]

The onshore intermediaries legislation was introduced essentially to stop the exploitation of low paid workers. Rather than employing them direct, some companies were expecting workers to set up as sole traders which means that they then had no obligation for employer's NIC's. HMRC decided that if there was supervision, direction and control (or a right to) over the workers then they would be employees for tax purposes and therefore would need to go on the company's books. The legislation was not intended to apply to PSC's so the agency questions should be worded in such a way that they confirm you are not working as a sole trader; they don't really need to determine your IR35 status (unless you're working in the public sector)