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Onshore Intermediaries Legislation – Will it affect you?

The quick answer is YES!

HMRC has just closed it’s consultation on new legislation for those who work through Onshore Intermediaries which is due to become law in the Finance Bill April 2014.  We think that some of the terms are a bit unclear and so wanted to let you know why this is important to you.

If you work for an end client via an Agency then you are working through an Employment Intermediary.  So even if in the future you operate via your own Ltd Company, there is an intermediary in the chain.

This legislation, and it’s partner the Offshore Intermediaries Legislation, which became law last year and will become operational from April 2014 are both designed to ensure that contractors are paying the correct amount of tax and NI, and also to clamp down on those falsely claiming to be self-employed.

Last week I attended a consultation with HMRC regarding the new legislation, and the question was asked whether there will be any changes to IR35 as a result of this new legislation to tighten up on false self-employment.  The message from HMRC was clear that they feel IR35 is sufficient to catch those contractors who have been PAYE and then stay on the same contract but start to claim they are self-employed and operate via their own Ltd Company/Personal Services Company.  What they have lacked before is the ability to find those contractors.

Under the new legislation both the End Client, and the Agency will be responsible for making quarterly submissions to HMRC detailing everyone working for them who is not on their PAYE payroll.  They will need to include your name, NI number, how much they have paid you, how many hours you worked and details of how you are being paid ie via a PAYE Umbrella company, your company details if you have set up your own Ltd Company etc

HMRC will then be able to cross check your tax records against what the agency say they have paid to you, so for example they will check Simplify’s PAYE returns to see that the figures match, or your self-assessment to ensure you have declared all the agency have paid you to ensure it has all been declared as income. 

So, will this legislation affect you?  Yes it will as you are a contractor, but whilst you are being paid via Simplify we will be dealing with all the additional reporting behind the scenes, and as we already operate PAYE on your income it will mean no difference for you on a day to day basis as Simplify will take care of it for you. 

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