Recruitment agencies placing temporary staff with clients will be subject to strict HMRC reporting requirements from 5 April – something that will place a significant burden on organisations according to a Nottingham tax expert.
The new requirements will mean that the recruiter or other employment intermediary will report details of workers that have not been treated as ‘employees’ because PAYE is operated elsewhere – for example through an umbrella company, or because they are not under the agency’s control.
This will cover workers that a recruitment agency has helped supply temporarily to clients within the UK – with the first report due by 5 August 2015.
Simon Browning, tax partner at UHY Hacker Young in Nottingham, said: “This new reporting system will undoubtedly create an awful lot of additional work for recruitment agencies that place temporary staff and those whose PAYE is covered elsewhere, such as by their own limited company.
“Agencies will be required to provide detailed information about individuals as well as explain why they have not been treated as an employee and paid through PAYE.
“Already the guidance has come under criticism for being too onerous for agencies and HMRC’s apparent lack of regard for concerns that have been raised. The penalties for not complying with these new regulations can also become quite significant, reaching £1,000 per quarter for those totalling three or more offences in a year.
“This isn’t something that these types of businesses are used to doing and the information required is quite onerous, so it may be difficult in the first instance and they may need to seek professional advice.”
Workers excluded from the new reporting regulations are actors, singers, musicians and other entertainers or a fashion, photographer’s or artist’s model.
Reports will have to be submitted quarterly, with the first due on 5 August.