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Construction, driver & hospitality agencies to be hard-hit by false self-employment legislation

As the three main sectors which use self-employed contractors, recruitment agencies operating in these areas will be under increased pressure to ensure they are fully compliant.  Subject to the final legislation which comes into force on 6th April 2014, the agency who directly contracts with the end hirer

will now be liable for any underpaid tax and national insurance of its self-employed temporary workers - if they have paid a temporary worker on a self-employed basis (even via one or more service providers/intermediaries), the agency will need to prove self-employment and that the worker was not subject to control.  Failure to provide sufficient evidence will result in the agency being liable for the correct amount of tax and national insurance as if the worker had been employed by them under PAYE.

will also be required to report quarterly on all & lsquo;gross’ payments made anywhere within the supply chain to temporary workers, contractors and freelancers and

Matthew Brown, managing director of giant group, commented, “This new legislation will have by far the biggest impact on recruitment agencies in years.  There are huge unquantifiable financial risks for agencies and very onerous quarterly reporting to HMRC. The temporary, contract and self-employment sector will now have to adopt new administrative processes to ensure they are compliant with the new legislation.  This will understandably impact a recruiter’s time as they work to ensure they remain compliant and put in place robust preferred supplier lists and ensure they have processes to enforce them. In industries that are heavily reliant on these self-employed individuals, such as hospitality, construction and drivers, this liability headache is likely to be worse. With the new legislation coming into force soon, recruiters in these sectors in particular must ensure they are fully prepared.”

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