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Sam, Accountant
Category: Tax
Satisfied Customers: 14154
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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Hi, I have a small recruitment business supplying temporary

Customer Question

Hi, I have a small recruitment business supplying temporary workers. All employees are on paye but I hear that other companies somehow do not pay N.I etc, and have particular schemes to make claims. I was wondering if anyone had advice on the set up of this?
Submitted: 3 years ago.
Category: Tax
Expert:  Sam replied 3 years ago.

Thanks for your question. I am Sam and I am one of the UK tax experts here on Just Answer.

Many recruitment businesses are going down the WRONG pathway of engaging their candidates on Umbrella schemes (so making them a limited company) or as contractors (making them self employed)

However this is in breach of employment status law, and IR35, each of which negates engaging worker4s in this way.

AS you are the engager in ALL instances, and the candidate can neither make a loss or a profit - or advertise themselves for work, be responsible for sending a substitute if they are unable to attend at the last minutes, cannot charge for their out of pocket expenses to the client,then they are an employee of yours and there is no way legitimate away around this.

I am happy to supply links to legislation if you would like


Customer: replied 3 years ago.
Yes please that would be great
Expert:  Sam replied 3 years ago.
HI Simon


First I have added a link re the position of employment agencies and their engaging of staff and this I am afraid is all HMRC "speak"

This makes reference to the MSC (Managed service company)legislation

Link here for that

So you can see ALL workers are employees and PAYE must be operated on their pay.

Then we have the Umbrella company position - and I have first added a link regarding the IR35 legislation

And this last link specifically mentions Umbrella companies used within employment agencies

What is happening is that the employment agencies are trying to state they are merely the accountant in the triad of the work. But as they set the fee for the client and determine the rate at which the candidate will be paid, this is a house of cards just in the process of being tumbled, which will prove very expensive to the employment agencies, for back National Insurance (and Tax) owed, that should have been paid by the employment agency, along with harsh penalties and interest for "late" payments, is it worth the risk, I,m sure you can work that out for yourself.



Expert:  Sam replied 3 years ago.
Hi Simon

I do hope you are able to move forward with a batter understanding of how to engage staff, let me know if you have any follow up questions after reading the information on the links provided.