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There had already been concerns expressed by the sector during the consultation period. (See: The consequences of tax avoidance legislation are starting to hit home - Shout99, Oct 2013).
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HMRC says that compliant UK host businesses who have been deducting PAYE and NIC should notice no change and that the 'idea is to enable HMRC to be able to more easily prove the facts in cases where PAYE and NIC have not been deducted'.
The new rules state that if there is a UK agency in the contractual chain, then the UK agency will be responsible for operating PAYE and NIC. If there is more than one UK agency, the responsibility rests with the agency that contracts with the end client. Where there is no UK agency in the contractual chain the client the employed person works for is responsible for operating PAYE and NIC.
There is also a special rule that applies the secondary NIC obligation to a UK agency that is involved in supplying workers overseas, where the worker is in Class 1 National Insurance when working abroad.
The new legislation also simplifies the agency rules so that a worker is subject to Class 1 National Insurance and PAYE when they work through an agency and:
- the worker personally provides or is personally involved in the provision of services, to the client
- there is a contract between client and an agency under or in consequence of which the services are provided or the client provides consideration for the services, and remuneration is receivable by the worker.
The agency worker rule does not apply to those workers where it can be shown that the worker is not subject to (or the right of) supervision, direction or control by any person.
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Susie Hughes © Shout99 2014
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