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Quarterly returns for Agencies

Quarterly returns for Agencies

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Agency Quarterly Returns under Sec 44 ITEPA

I have received a circular letter and have had reports from tax lectures that it is believed that the quarterly returns under the above legislation involve a much wider audience than what one might reasonably assume from the word Agency.

I have regarded an Agency in these terms as a business that sells people's services as contractors to another agency or to an end user. Broadly speaking 'temps' or temporary staff under contract.

It is, however being suggested that the definition extends to cover, for example, a builder using an employee and a subby to build a conservatory,a car repairer using a subcontract MOT tester, a heating engineer using subcontract fitters and so on.

Should this be the case a huge pile of bureaucracy has been created which will push up the costs of business, slow up productivity even further and land HMRC with a shedload of data which they will not have the staff to handle.

HMRC's notes on the subject are inconclusive as there is no real definition of Agency. My reading tends to suggest that Agency means what I think it means but the penalties here are a bit eye-watering so I shouldn't like to find myself misled.

Any ideas?   The first return is due by the 5th August for the quarter to 5th July so its a bit close and the return requires a lot of information.

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By ssutherland
23rd Jun 2015 09:59

What is being supplied to the customer?

I have been debating the same issue with my colleagues for some time and I believe that the key principle is what is being supplied by the intermediary.  In the example given of a builder building a conservatory, there is no contract between the builder and the client for the provision of services, instead it is for the construction of a conservatory.  There is no supply of labour to the client so there is no agency relationship.  It would be different if the customer had purchased all the materials and had engaged ABC builders to supply workers to perform the construction of the conservatory. 

Similarly, with subcontract MOT testers or heating engineers supplying a heating system, they are supplying a service to the customer and not workers.  The services of the workers are being supplied to the heating engineer/car mechanic/builder in the above examples and not to the end customer.

My understanding is that the legislation requires a report to be made where there is an intermediary involved between a customer and a worker and the intermediary is involved in the supply of the services of that worker to the customer, i.e. a typical agency relationship.

The lack of commentary or formal guidance on this topic is making it very difficult to get any real clarity on what is or isn't caught by this reporting regime.  The above is my understanding of the position certainly but I would be interested to hear anyone else's view on this, particular as the first reporting deadline will soon be upon us.

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