Changes in employment intermediaries rules

[Rob79]

https://www.gov.uk/government/public...e-changes-mean
https://www.gov.uk/government/public...intermediaries

I'm a complete beginner in terms of what umbrella companies etc do but I wonder if the above is:

a) new, or

b) a surprise?

[LisaContractorUmbrella]

Don't worry Rob - it's neither These new rules will only apply where agencies engage with umbrella companies that do not operate PAYE - recruiters will have to provide extensive information to HMRC on individuals who use tax avoidance schemes

[Rob79]

Don't worry Rob - it's neither These new rules will only apply where agencies engage with umbrella companies that do not operate PAYE - recruiters will have to provide extensive information to HMRC on individuals who use tax avoidance schemes

Which I suppose leads to the obvious question of what is a tax avoidance scheme?

Not a question that I would attempt an answer at!

[LisaContractorUmbrella]

Which I suppose leads to the obvious question of what is a tax avoidance scheme?

Not a question that I would attempt an answer at!

Well it seems that HMRC only have 2 boxes - PAYE Employee or Limited Company Employer - they try to cram everything else into either one of the boxes and then, when it won't fit, label it tax avoidance

[International Adviser]

What's interesting is that everyone is brought in to the pot if the worker is provided to a client in the United Kingdom, even if they are working outside of the United Kingdom.

Agencies that may have historically paid money to offshore companies for these types of workers are going to have to brush up on their Social Security and Income Tax rules. As although the Offshore Employment Intermediaries doesn't bite, which means PAYE and NI doesn't have to be applied at source, the Onshore Employment Intermediaries will apply and the UK based agencies will need to have a reason why UK NI and UK Income Tax has not been applied.

This will be particular relevant to agencies placing UK Workers, who normally reside in the UK and where in the UK prior to posting, with UK Clients to work in the Countries where the UK doesn't have agreements to prevent double social security and the worker remains liable to UK Tax.

[LisaContractorUmbrella]

What's interesting is that everyone is brought in to the pot if the worker is provided to a client in the United Kingdom, even if they are working outside of the United Kingdom.

Agencies that may have historically paid money to offshore companies for these types of workers are going to have to brush up on their Social Security and Income Tax rules. As although the Offshore Employment Intermediaries doesn't bite, which means PAYE and NI doesn't have to be applied at source, the Onshore Employment Intermediaries will apply and the UK based agencies will need to have a reason why UK NI and UK Income Tax has not been applied.

This will be particular relevant to agencies placing UK Workers, who normally reside in the UK and where in the UK prior to posting, with UK Clients to work in the Countries where the UK doesn't have agreements to prevent double social security and the worker remains liable to UK Tax.

Not sure if I've read you right here but the Offshore Intermediaries legislation does lay the PAYE responsibility at the door of the UK agency if they use an offshore intermediary HM Revenue & Customs: Offshore Employment Intermediaries

[International Adviser]

Not sure if I've read you right here but the Offshore Intermediaries legislation does lay the PAYE responsibility at the door of the UK agency if they use an offshore intermediary HM Revenue & Customs: Offshore Employment Intermediaries

I think you got my point. The Offshore Employment Intermediaries is fundamentally directed at Offshore Companies working with UK Agencies to supply workers with UK Clients to work in the UK, but also overseas. However, the legislation that is now a mixture of both that and the Onshore Employment Intermediaries goes much further, certainly on the NI front as the tax position is fairly clear cut you are tax resident or are not.

I was concerned that the guidance quoted in this thread referred to the Real Time Information and was very weighted towards individuals working in the United Kingdom, in fact it gave the impression that HMRC where only interested in the UK work, but I wanted to bring to peoples attention was that the legislation can also apply where a worker is working for a UK Client, but his or her duties are undertaken overseas, which had historically been sidestepped by using an offshore company (who are still saying its OK). It is my understanding that in both cases the information should be RTI next August and agree that ultimately any PAYE and NI bill could end up on the UK Agencies door mat if they pay such workers incorrectly.

[LisaContractorUmbrella]

I think you got my point. The Offshore Employment Intermediaries is fundamentally directed at Offshore Companies working with UK Agencies to supply workers with UK Clients to work in the UK, but also overseas. However, the legislation that is now a mixture of both that and the Onshore Employment Intermediaries goes much further, certainly on the NI front as the tax position is fairly clear cut you are tax resident or are not.

I was concerned that the guidance quoted in this thread referred to the Real Time Information and was very weighted towards individuals working in the United Kingdom, in fact it gave the impression that HMRC where only interested in the UK work, but I wanted to bring to peoples attention was that the legislation can also apply where a worker is working for a UK Client, but his or her duties are undertaken overseas, which had historically been sidestepped by using an offshore company (who are still saying its OK). It is my understanding that in both cases the information should be RTI next August and agree that ultimately any PAYE and NI bill could end up on the UK Agencies door mat if they pay such workers incorrectly.

I think you may be right - I assume that the current rules surrounding how long you can work outside the UK before you become liable for income tax outside the UK won't have changed (typically 183 days depending on the country where the work is being undertaken) so, in theory, the Offshore Regs would apply. Have the offshore companies elaborated on why they believe that the legislation won't apply?