This week marked a big date for ‘commercial contractors.’ February 4 2014 was the last opportunity for
members of the Recruitment & Employment Confederation (REC) to submit their responses on the
government’s potential crackdown on people self-employed through payroll
companies.
In December last year, HMRC released a proposal that would
alter the regulations for people working through payrolls or commercial
contractors. The situation is tricky and
each person’s interpretation of the proposals will differ. Fortunately, Simon Noakes, chair of REC
Construction – which has been working hard to push back on the consultation –
penned a succinct update, giving a great summary of the situation...

The agency could engage with the self-employed person but
would have to save evidence that they’re not under control of the clients – and report regularly to HMRC details of
the payments. This gives a safeguard for
HMRC to check how the workers are being treated. And, if they believe they’re being controlled
by clients, the agency will again be liable for tax and National Insurance.
The consequences mean an end to self-employment through
intermediaries: anyone who keeps working in this way will automatically be
considered as employed for tax purposes and the above rule will apply.
If you’re a Personal Service Company or Umbrella PAYE you’re
in luck though – the focus here is on commercial contractors.
If accepted, the changes will come into play on April 6 this
year. That doesn’t leave much time for
businesses to adjust to the changes and could cause dramatic increases in
labour costs – not ideal...
That’s not the only problem Simon and the REC cite,
however. Because there would be no
end-user liability, clients could engage with rogue operators who ignore the
new legislation, ultimately putting the compliant agencies at risk.
Which way will it go?
We’ll keep you posted as the debate continues...and of course we will
let you know if the changes are accepted.
Tell us what you think
on Twitter: @primatrecruit
on our blog: www.blog.primatrecruitment.com
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