New changes that came into effect on 6 April 2015 require Intermediary Companies to now make a quarterly disclosure to HMRC on any worker outside PAYE.
Those affected are employment intermediaries who meet the following conditions:
- Is classified as an agency
- Has a contract with a client
- Provides more than one worker’s services to a client
- Makes one or more payments for the services (including payments to third parties)
This does not include personal service companies that are under the IR35 regime already. Therefore, HMRC will now know who is not under the IR35 regime, making it is essential you are of aware of your worker’s situation.
First Return – Due Date 5 August 2015
The first return will cover the period 6 April 2015 – 5 July 2015 and will need to be submitted to HMRC online by 5 August 2015. Returns will be due on the 5th month following the end of each quarter.
The return will need to detail the following key information for both UK and overseas workers:
- Workers name
- Full address
- National Insurance number
- Start and end dates of the assignment
- Explanation as to why PAYE had not been operated, for example because the worker was self-employed, a personal service company or somebody else had operated PAYE
There is detailed guidance concerning this on HMRC’s website – please click here to view.
As with any return, penalties will be issued for late submissions, incomplete or incorrect returns. Penalties will fall in line with the PAYE penalty regime, however, HMRC have stated that the first offence will be subject to an automatic £250 penalty, increasing to £500 on the second offence and any further offences £1,000. Intermediary companies will also be at risk from HMRC imposing daily penalties where failure to submit a return continues.
It is clear to see that intermediary companies will have an increased exposure from the compliance team at HMRC, as such, it is key to keep detailed records and ensure accurate reporting is carried out on a quarterly basis.
If you would like further information on the above changes or would like any assistance on preparing and submitting the quarterly returns, please contact firstname.lastname@example.org.