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Agency legislation

Agency legislation

I act for a company which provides asbestos removal services. In addition, the company also provides self employed subcontractors to other asbestos removal companies, in affect acting as an agency.

I should be grateful if anyone could advise me of the employment status of these subcontractors?

Whilst researching agency legislation I came across Section 134 ICTA 1988 / Part 2 Chapter 7 ITEPA 2003 which states that the agency legislation applies where a worker provides services to an employer through a third party in such a way that, technically, the worker is not an employee of either. The third party will often be an employment agency but the legislation may apply to any worker who provides services through any third party.

Where Section 134 / Part 2 Chapter 7 applies, the services provided by the worker are, for income tax purposes, treated as if they were the duties of an employment held by the worker. The remuneration receivable is chargeable to tax under schedule E, as employment income. Accordingly, all the employment income rules apply and PAYE must be operated by the payer.

My understanding of this is that all agency workers are in affect treated as employees of the agency no matter whether they are self employed or not.

I would appreciate any words of advice from anybody in the Know.



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21st Sep 2007 11:18

MAL Scaffolding
The circumstances appear to be very similar to those in the MAL Scaffolding case (SpC 527) where the subbies were judged to be self-employed, thus rejecting the Revenue's case that they should be taxed under PAYE as employees.

The agency aspect was never mentioned. Like you, I cannot understand why, but it wasn't, so you have some precedent to treat the subbies as self-employed.

Hopefully, somebody who is more expert in this area can explain further.

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21st Sep 2007 16:23

I'm even more confused!!!!
Thanks Euan for your reply and pointing out the MAL scaffolding case, but as you advised it doesn't even mention agency legislation. I am even more confused.

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24th Sep 2007 13:14

Specialist Area

We work with a number of asbestos removal companies – as specialist PAYE/NIC/CIS and Employment status consultants.

From what you have posted no one can determine if the agency legislation is applicable or not. What you are asking for is a specific answer to specific circumstances. Any “person in the know” will not be able to give you any valuable advice without knowing a great deal more information – as the adage goes a little information is a dangerous thing.

I would advise that you speak with a specialist firm who work this minefield of the taxes arena and bypass “free” throwaway advice.

Adrian Williams

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By Anonymous
25th Sep 2007 09:29

Thank you all for your advice.


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