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False self-employment: agency directors could be liable, warns Parasol

Parasol managing director Derek Kelly said: “HMRC currently has the power to recover unpaid PAYE tax from a company director if he or she has received a payment, and knows that insufficient tax has been deducted.  

“It is our understanding that HMRC is looking at ways of extending this to transfer liabilities from the company to the directors, if they deliberately fail to comply with the new onshore intermediaries legislation.

“Putting directors themselves on the hook for tax, rather than the recruitment businesses themselves, would be a bold and dramatic step.

“Any agency directors who have thus far buried their head in the sand over false self-employment would no doubt be forced to sit up and take notice.”  

The warning comes as Parasol launches a new version of its outsourced employment solution for agencies, in response to the onshore legislation.

Parasol Select is aimed at staffing firms that place large numbers of self-employed workers and operate in sectors such as manufacturing, engineering, construction, logistics, healthcare and hospitality.  

By offering a compliant third-party employment solution, it is designed to free recruitment businesses from the financial and reputational risks posed by the legislation, which comes into force on April 6th.  

Kelly said: “It’s abundantly clear that the new legislation on false self-employment will have an enormous impact on the recruitment industry – perhaps even bigger than AWR. 

“We have been inundated with calls and enquiries from recruitment firms since the draft legislation was published late last year.

“Many of them simply want to do the right thing – they want a robust and compliant solution that offers a good deal to workers, but that also protects their business from risk and enables it to remain competitive. 

“We have been working away on such a solution behind the scenes, and I believe we have come up with something that’s very appealing.

“In essence we’re offering to the entire recruitment industry a more flexible and adaptable version of what we have been providing to contractors, freelancers and our current agency partners for the past 14 years.” 

A staffing firm that uses Parasol Select will be able to outsource the employment of its workers to Parasol. Based on the agency’s specific requirements, Parasol can offer a range of services and functions.

The Cheshire-based company will provide agency workers with overarching contracts of employment and all of the rights and benefits associated with & lsquo;traditional’ employment, such as holiday entitlement, guaranteed hours of work, HR support, sick pay and maternity / paternity pay.

Parasol ensures workers are paid on time, deducting PAYE tax and National Insurance (NI) contributions at source. Agency workers only need to complete one timesheet for the end client, meaning the administrative burden on them will be kept to a minimum.

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