A contractor providing their services via an employment intermediary is deemed to be under supervision, direction or control (SDC) when the end-user client directs the manner in which they provide those services – i.e. the end-user/client tells the contractor how to perform their duties.
From April 2016, contractors who fall under the supervision, direction and control of their end-user client are not entitled to claim tax-free expenses (including mileage), unless:
They provide their services from more than one workplace within the same assignment. If so, they are able to claim mileage from home to the secondary workplaces; or between workplaces if they travel to more than one during the same day.
Our range of products provide options whether your contractors fall under the supervision, direction and control of the end-user, or not.
Temporary contractors providing their services via an employment intermediary, such as a recruitment agency, are unable to claim tax-free expenses (including mileage where they are travelling to a single site for the entire duration of their engagement), unless:
Contractors who provide their services via an employment intermediary are presumed to be under the supervision, direction or control of the end-user unless proved otherwise. Therefore, the agency and the end-user will need to demonstrate that SDC is not present on an assignment. Due diligence and scrutiny of each and every assignment contract will be required.
However, it is unlikely that HMRC will police SDC compliance by inspecting individual contracts within individual agencies. Instead, its focus will be on businesses like Payme which will be inspected regularly, no doubt, to check compliance with the new (and ongoing) regulations. It is our responsibility therefore to maintain robust and compliant processes and procedures. This also means that all risk lies with us. So your business is protected. Plus, if you want to audit us as part of your due diligence, we are happy to facilitate that.
HMRC’s starting point is that all contractors providing their services via an employment intermediary are under the supervision, direction or control of the end-user.
To demonstrate that they’re not, you’ll need to establish whether the end-user client (this could also be a manager or foreman) tells the contractor what to do and how to do it. This might include overseeing how the work is done, controlling when it is done and moving the contractor around the site as the client chooses.
If you need help determining whether your contractors fall under SDC, get in touch. Our SDC check has been developed in conjunction with the UK’s leading tax and employment law advisory bodies and is a robust mechanism for assessing SDC. Call us now on 0333 200 0845.
Regulation 13A of the ‘Conduct Regulations’ (Conduct of Employment Agencies and Employment Businesses Regulations 2003) introduces a requirement to provide a ‘Key information document’ for agency workers.
The new regulation came into effect on the 6 April 2020. From this date, all new agency workers must be given a ‘Key information document’ before agreeing terms with an employment business. The Agency will need to provide it to the “work seeker” before they start an assignment. The purpose is to provide transparency on how the worker would be engaged and who would be paying/employing them and demonstrate the flow of income showing what deductions are made and for what.
The Key Information Document sets out key information about your relationship with us and the intermediary or umbrella company used in your engagement, including details about pay, holiday entitlement and other benefits.
Limited co/PSC contractors working in the public sector are now subject to new rules (known as Off-payroll working in the public sector) whereby their agency or end-user will be charged with determining their IR35 status. If the contractor is deemed to be caught by IR35 the agency or end-user would be responsible for applying the deduction of PAYE tax and National Insurance (employers and employees) contributions and RTI submissions.
PSC contractors are also no longer be able to deduct the IR35 5% tax‐free allowance, which was intended to reflect the costs of managing IR35.
Agencies need to be aware of those clients that are public sector bodies, or that subcontract to public sector bodies in order to determine the IR35 status of contractors working for them. A list of public sector organisations can be found here (Annex B).
To help contractors working in the public sector determine whether they fall under IR35 rules, HMRC is developing the Employment Status Service (ESS). This online tool will calculate a contractor’s status based on their responses to a series of questions.
While it is only PSC contractors working for public sector clients who are affected by new IR35 rules, those in the private sector can’t afford to relax. When it comes to IR35, everyone needs to ensure their house is in order.
Our products and processes have been carefully designed under the supervision of the UK’s leading tax and employment law advisory bodies. Our systems and procedures have been and will continue to be audited by HMRC.
Sign up is simple and straight forward, simply call 0333 200 0845 and have your UTR (Unique Tax Reference and National Insurance number to hand.
A member of our team will ask you a number of questions to determine whether you are truly self-employed.
Our software communicates directly with HMRC to verify your status, registration takes a matter of minutes.