Onshore Employment Intermediaries Reporting: Time to review your providers?

Following the Chancellor’s Budget speech last month, the legislation regarding reporting requirements is now in place to further strengthen the government’s ongoing objective to crack down on tax avoidance.

What does it mean for agencies? : Increased administration burden

New reporting measures introduced will mean a dramatic increase in administration for agencies. They will need to provide a long list of information, including payment details, of all workers not being paid directly under their payroll. This administrative burden has resulted in many agencies looking to their third party payroll solutions for assistance.

In response to this cry for help, many umbrella companies are now offering recruitment agencies the information that HMRC require for each worker being paid through their payroll model, and even go as far as to state that they will provide it in the required format.

So what about those workers that are using Personal Service Companies (PSCs)? Published guidelines from HRMC have already stated that there will be less to report to them by agencies, for workers choosing to be paid via their own PSC. Therefore, the weight is lifted slightly for the agents and could be a more attractive solution.

The importance of a compliant Preferred Supplier List (PSL)

Del Williams, Head of Business Development at Churchill Knight has commented, “Engaging in sole supplier agreements with agencies would be ideal, but in practice these are not viable in order to meet the compliancy needs of HMRC. I would always recommend that agencies invest time in creating a strict PSL offering a variety of payroll solutions to their workers”.

Due to changes to the legislation, many have looked towards a ‘one size fits all’ model. However, not only does this not work in practice, legislation now in place emphasises the need to have a varied PSL.

Furthermore, agencies should not appear to be pushing their self-employed workers towards one option, and the way in which they are paid should be a decision made entirely on their own. Having a varied PSL, with both umbrella and limited company accountancy providers, will help agencies display full compliancy as they are providing multiple suggestions to their workers for payroll solutions.

To ensure that liability for any unpaid tax or National Insurance contributions does not fall back onto the agency, it is more important than ever for agencies to ensure that the providers that are on their PSLs tick all the boxes with regards to compliance.

Industry body Professional Passport have previously commented on the change. They have stated that recruitment agencies should be seeing this legislation as an opportunity, not a threat, to ensure the organisations they are dealing with are recognised as responsible and compliant.

How can a provider like Churchill Knight help?

By the first report in August, all agencies should have strong relationships with fully compliant providers, in order to help limit the risk of liability. Agencies can confirm the compliance of their suppliers by ensuring they are audited by recognised bodies, such as Professional Passport.

As a leading limited company accountancy service provider for contractors, Churchill Knight can provide a fully compliant solution to agencies. Churchill Knight is fully audited by Professional Passport and we ensure that we are remain compliant with all HMRC legislation.

“Supporting recruitment agencies when new legislation is brought into play is a huge part of my role”, Del Williams comments further. “The reporting requirement coming into effect from April has thrown a curve ball at the recruitment industry and agencies require the help of others, like us, to effectively meet these responsibilities. We welcome any opportunity to work with recruitment agencies to further support them where we can”.

If you are looking to expand your PSL or wish to find out more information on the above subject, please call our Agency Sales team today on 0808 2525533.

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