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Introduction

As from 6 April 2015, a reporting obligation applies to employment intermediaries, requiring them to make quarterly returns to HMRC in respect of the workers they use to supply services to their clients where PAYE is not operated in respect of those workers. This reporting requirement is embedded in the PAYE regulations, despite applying to intermediaries who may have no direct employees, no PAYE scheme and no current exposure to the PAYE regime. The HMRC guidance is at ESM2070 onwards.

Not only does it apply to employment agencies and intermediaries such as personal service companies (PSCs) or managed service companies (MSCs) but also to any business which uses freelancers to supply services to its clients, even if only to supplement the services supplied by its own workforce.

The reporting obligation is completely detached from the RTI system and requires online submission of a free-standing quarterly report.

There are penalties for late, incomplete or incorrect returns.

Who is affected?

This reporting obligation falls on any employment intermediary who has a contract with the third person