Introduction
Recruitment agencies are now legally required to assist HM Revenue & Customs (HMRC) in cracking down on contractors who are underpaying tax and NI with the use of an offshore employment intermediary.
Key points
- An offshore employment intermediary is a company in the labour force supply chain operating outside of the European Union.
- The Offshore Intermediaries Legislation was put in place in April 2014 to target tax and NIC avoiding contractors working with or engaging with offshore intermediaries.
- Recruitment agencies in the UK are now responsible for the PAYE and NIC of the contractor when the agency has any correspondence with the contractor’s end client.
- If the contractor is working with more than one UK agency, the agency working with the end client is responsible.
- Recruitment agencies are required to provide HMRC with a quarterly list of the contractors they are not deducting tax and NIC for. If the recruitment agency submits the document late, a fine of up to £1000 may be issued by HMRC.
A recruitment agency should not be making any financial gain by working with a contractor who is engaging with an offshore intermediary at any stage of the contractual supply chain.
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Compliance will always be our priority
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