You may not know if your business qualifies as an employment intermediary, and we couldn’t blame you!
But it’s extremely important you know if you are affected by the legislation that was included in the Finance Bill 2014 concerning false self-employment (so-called Onshore Employment Intermediaries). Besides bringing new tax and National Insurance considerations for both businesses and contractors, this law means that an ‘intermediary’ businesses will now have to make quarterly reports to HMRC in certain circumstances, and contractors (including those with Personal Service Companies) are also affected by its requirements. We look at the details here.
This legislation came into effect on 6th April 2014 and it affects:
- Self-employed contractors who are employed via ‘intermediaries’ and who currently pay taxes as a self-employed person, and
- The ‘intermediary’ businesses themselves.
The Government introduced the legislation to clamp down on the use of false self-employment models where workers and employers avoid tax they should be paying and where the employer also avoids their other employment responsibilities.
When is a business classed as an intermediary?
According to the government, an intermediary is:
- a person who makes arrangements for an individual to work for a third person, or
- a person who makes arrangements with an individual to be remunerated for work done for a third person.