IR35 for agencies

Agency Legislation

There are now a lot of responsibilities and potential liabilities for agencies over the way in which individuals are paid especially if they are ‘off-payroll’.

If an agency engages individuals on a self-employed basis, whether it be directly or indirectly, it is exposed to the risk of HMRC challenging the position under the agency legislation (ITEPA 2003 s44).

If they supply personal service companies, from April 2020 they may be responsible for IR35 if they are deemed the “fee payer” by HMRC and will have an obligation to provide information down the chain.

There are also quarterly reporting requirements for all agencies which must confirm (among other things) who has been paid, how much and why PAYE was not deducted.

THE SERVICES WE PROVIDE CAN VARY BUT CAN INCLUDE:

Consultancy Service

It is possible for an agency to restructure how they operate so that they take on the project rather than supply the people. If this is done in the correct way, it will mean the agency becomes the client for IR35 purposes and the end client will no longer be liable for IR35 or have to be concerned about it.

Depending on circumstances this may also mean that the new provisions no longer apply if the agency is deemed to be a small business for IR35 purposes and so the liability remains with the personal service company.

If companies are looking at offering this route to their clients, we can provide assistance and advice to ensure it works as intended.

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