Warning to agencies over shift in tax responsibility

4th April 2014

A stark warning highlighting significant changes in the tax implications to recruitment agencies was issued this week.

Higgs & Sons has warned agencies to take note of the Finance Act 2014 - which came into effect on April 6 - specifically its terms relating to the provision of 'self -employed'  workers.

Jane Rudge, a commercial solicitor at Higgs, explains: "The changes shift the burden of responsibility for the payment of PAYE and national insurance contributions for these 'self-employed' workers away from the self-employed consultant to the agency contracting with the end client itself. 

"This could affect the structure, processes and profitability of many recruitment agencies."

Jane points out that the new legislation implements various reporting requirements on those companies who will need to ensure they are up to date with the relevant provisions of the Finance Act and how they affect the workers that they supply, and their payment. 

News that the Government has agreed to delay the new PAYE reporting requirements until 2015 has been widely welcomed, although agencies will still need to ensure that they have the appropriate procedures in place to gather the required information.

Jane added: "Ultimately, failure to comply with the requirements of the new legislation could leave the agencies with a hefty tax bill so an understanding of how it applies to each organisation and the individual worker supplied to a third party is essential.

"It is for that reason that we recommend companies who are unsure about the implications of the changes seek specialist legal advice."

For further information on any aspect of the changes, contact Jane in the commercial team at Higgs & Sons on 0845 111 5050 or email jane.rudge@higgsandsons.co.uk.

Higgs & Sons is headquartered at the Waterfront Business Park in Brierley Hill. The firm employs more than 200 people, which includes over 100 specialist lawyers.


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