The agency provisions 44 to 47 of the Income Tax (Earnings & Pensions) Act 2003 (“ITEPA”) were amended and came into force on 06 April 2014. HM Revenue & Customs (HMRC) has constantly been concerned about the increasing number of workers who function as self-employed or sole traders but who are in fact disguised employees, sometimes hidden by intermediary companies. As such, HMRC thinks that they are not paying a fair of amount of tax or not paying any Pay as You Earn (PAYE) or National Insurance Contributions (NIC) at all.
The amendments brought to the law seek to pass the hands to recruitment agencies as they are deemed to be more directly involved with clients and have more influence on workers’ payment terms and conditions. The law targets those agencies that supply workers to end clients and deny employment rights as well as avoid NIC payments to workers. From 6 April 2014, PAYE is due on the earnings of the workers caught by the legislation and the agency is liable for NICs. If these are not paid, penalties are applicable.