Further to publication of the Onshore Intermediaries Legislation and proposed reporting requirements in early 2014, there appears to be possible confusion amongst some of the Recruitment community with regards to the risks associated with their workers using PSC’s (Limited Companies) as their payment supply models.
We took the opportunity earlier this week at Recruitment Live at London ExCel to address this issue in an open discussion with a representative from HMRC amongst other recruitment agencies. The Head of Business Development at Churchill Knight, approached the suggested ‘PSC vs. liability risk to agents’ topic by way of requesting clarification.
HMRC’s representative reiterated that within the HMRC’s technical note it is stated that the updated financial liabilities coming into effect due to the intermediaries legislation will generally not apply to workers engaged via a PSC supply model. During the discussion one recruitment agent posed the question that if a PSC workers were to fall foul of IR35, whether the liability will then be transferred up the chain to the agency. It was stated by the HMRC representative that this is not the case as it is superseded within the Intermediaries Legislation (IR35) that it would remain the liability of the worker as he/she was the one to declare their tax status.
To clarify, reporting requirements set out by HMRC apply to all workers not being paid through an agencies PAYE payroll (i.e. Umbrella, Limited Company and Sole Trader). With regards to financial liabilities falling upon the agency themselves, PSCs (the Limited Company model) are the lowest risk category with regards to this liability.
The discussion held between our Head of Business Development and HMRC’s representative indirectly reinforces the importance for agencies to engage with Limited Company accounting service providers such as Churchill Knight & Associates Ltd in order to remain compliant and at low-risk with regards to recent legislation changes.
If you would like to discuss this topic further or have any questions regarding the above please direct your questions to Philip Allan, our Head of Business Development via email – firstname.lastname@example.org.