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P11D benefits for agency workers

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Looking for a second opinion (or correction) on this one. Client hires the occasional/temporary agency worker, who is paid under PAYE by the agency. The worker receives, for example, entertainment in excess of the £150 limit from the client. Section 44 of ITEPA 2003 says that for income tax purposes remuneration paid to the worker is to be treated as income from employment by the agency. I assume that this extends to benefits in kind? (In which case, presumably the agency needs to obtain details from all end-clients of benefits provided to their worker clients?)

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06th Jun 2019 13:44

The worker is not an employee of the company and therefore no P11D declaration is required. The agency that the worker works though is one of the company's suppliers. The company has kindly paid for Business Entertainment to one of its suppliers. This has implications for the company in the reporting (and payment!) of both CT and VAT.

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06th Jun 2019 13:46

EIM21835 starts with a statement that "An employee...is exempt from tax on employment income on certain goodwill entertainment, provided by third parties, for him or her."

Whilst I haven't read the relevant EIM in full, that seems to me that it could cover your client's situation. There is a fair bit in preceding and following sections about benefits provided by third parties.

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06th Jun 2019 14:03

I know you don't like respondents questioning the reasons behind queries, but... is it commonplace for hirers of occasional/temporary agency workers to provide those workers with, for example, entertainment in excess of the £150 limit?

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to Tax Dragon
06th Jun 2019 15:41

I've no idea how commonplace it is (presumably not very as this is the first time that I have come across it), but in this particular instance the individuals attended the Xmas party where the cost was significantly greater than £150 per head.

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