There are special rules that apply when an intermediary must treat a worker they provide to a UK-based client as an employee for Income Tax and National Insurance purposes.
Since 6 April 2014, a worker is treated as an employee if the following conditions apply:
- is placed with a UK-based client
- personally provides their services to the client
- provides their services to the client, or is paid for their services, because of a contract between an intermediary and the client (or someone connected to the client)
- is, or can be, supervised, directed or controlled by someone as to how they do the work
- isn’t having the payments they receive for providing their services already treated as employment income
These conditions don’t apply if a worker provides their services:
- as an actor, singer, musician, other entertainer, or a fashion, photographer’s or artist’s model
- from their home or somewhere that isn’t controlled or managed by the client or required by the nature of the services
HMRC has recently published advance notice that from 6 July 2015 onwards intermediaries will be required to send HMRC reports that contain details of all workers and their payments where PAYE wasn’t operated.
The intermediary that has the contract with the end user (client) of the worker’s services is responsible for sending the report. There may be penalties for late or incorrect submissions. HMRC is expected to publish more details soon.