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Know the due diligence process that will help you avoid the upcoming penalties

We held a seminar ‘Onshore, Offshore…Be Sure!’ at Barclay’s London HQ, One Churchill Place 4th April. The speakers: Wesley Scott, Liberty Bishop Contractors Service’s Business Development Director and Robert Burton, HMRC’s senior policy advisor.


Presentation Suite Two was packed by many high level recruitment directors.

Wesley set the scene with grave awareness of how contractors are lured by certain cowboys in the market who offer unrealistically high retentions – I’m sure you have seen on the web with the promise of 90% + take-homes!

Wesley proceeded to give an in-depth overview on the offshore employment intermediaries legislation along with the reporting requirements due to come in August 2015. It was clear, even from the overview of the offshore legislation alone, that it is now paramount that the agencies take a keen interest in how their candidates are being paid and take a wide berth in letting candidates use offshore scheme providers.

The legislation overview continued with the highly anticipated Onshore Employment intermediaries:

  • It’s designed to tackle false self-employment
  • How HMRC are losing out on substantial amounts of revenue due to no Employers NI being paid over in relation to those workers
  • The falsely self-employed workers are missing out on benefits such as holiday pay, SSP, pension auto-enrolment etc.
  • Workers falsely self-employed under CIS on the basis they are under the direction, supervision, and control of the client. Unless the agency has been subject to receiving fraudulent information, they will be liable for acting as the employer and deducting tax and NICs.

What it means for agencies from August 2015? They will have to submit a quarterly electronic return (including details of payments to self-employed, umbrella and PSC workers) to HMRC for all individuals not otherwise accounted for under the agency’s own RTI submission.

As Wesley highlighted the TAAR (targeted anti-avoidance rule), eyes and ears across the room pricked up when warned that a TAAR could be enacted against them (the agency) in instances where they require all workers to set up their own LTD Company as a means of avoiding the legislation!

The moment Rob Burton, HMRC’s policy advisor stepped forward for the Q&A session. Numerous questions were fired at the advisor from a variety of sectors such as Construction and IT. REC questioned HMRC that during Wesley’s overview, he had emphasised the forthcoming penalties for those that report inaccurately.

Rob then expressed the HMRC’s current stance on the legislation and expressed they’d worked with many companies at round table events to get it in order.

To date, this was fresh news to the agencies who then asked for further clarification on these imminent penalties. After which Wesley took to the stand to discuss how agencies can navigate the legalisation changes through implementing robust due diligence process which is briefly outlined below:

  • It centres on gathering the right data about the solutions your candidates are using. This will include details of the payroll provider that the candidate currently has a relationship with.
  • Secondly, by reviewing that data and understanding what it means, the agency will then need to make further enquiries and carry out a due diligence review ensuring you are compliant with both employment and tax laws.

To find out more details about how we can put in place a robust due diligence process for your agency, give us a call on 01582  461444 

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