New temporary workers and agency rules

New temporary workers and agency rules

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We have a number of clients within the construction industry that get some of the work via agencies.  Is it true that from 6th April, any work they get that comes from an agency must be treated as employment income and taxed as such?

In most cases, the work comes from lots of different agencies and the agencies are only used as a way of finding work by the individuals/companies.  I think it is a strecth to say that if an agency locates 3 days work for an electrician that those 3 days be classed as employment income but it is my understanding that this is what the rule changes would mean.

Can anybody clarify this position for me?  I would also be interested in any views on whether the situation is any different for slef employed individuals as it is for limited company contractors.

I must admit to feeling slightly concerned as I can see people signing up to umbrella companies in their droves as a result of this.

Any thoughts would be greatly appreciated. 

Replies (3)

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Euan's picture
By Euan MacLennan
31st Mar 2014 14:39

It is true

See my comment on another thread today.

Of course it is different for limited companies - PAYE cannot be deducted from payments to companies.

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By stratty
31st Mar 2014 15:02

Depends

As Euan points out there is a huge "initiative" by HMRC at the moment to attack what they perceive as False Self Employment.

The new legislation creates a requirement to consider direction, supervision and control of that Sub Contractor while working through an agency.

In order to circumvent this legislation I can see three outcomes: -

1.) Incorporation

2.) Umbrella PAYE

3.) Contracting directly (bypassing the Agency)

There is existing legislation to deal with the status of workers and I think HMRC are looking for a quick fix rather than applying what is already on the statute books.

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Replying to Duggimon:
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By dhughes1975
31st Mar 2014 15:24

Thank you to both of you for your respective answers.

Do you think incorporation is a realistic solution?  I agree that it is certainly the obvious answer but I cannot help but think that there will be some kind of anti avoidance legislation introduced. 

If not then, as far as limited companies go, are we still talking about the basic IR35 rules and nothing new?

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