The recent clarification issued by HMRC in connection with the chancellor’s intimation in his autumn statement of a clampdown on ‘false self-employment’ has been followed up with the announcement of a two-month consultation on the matter.
Several industry experts expressed concerns that without clear definitions of what false self-employment meant, legitimate employment intermediaries could be needlessly targeted, including responsibly-run PAYE Umbrella Companies and personal service companies. The Revenue swiftly stepped in to explain that its target is ‘mass-marketed schemes, where workers can be moved en masse into self-employment even though they should be employed’.
They are concerned about the growing number of people – often unskilled, low-paid workers – who find themselves falsely self-employed, often unaware that they have been engaged on this basis. This is a form of engagement that HMRC attributes largely to the employment intermediaries arranging and promoting such schemes.
The new consultation document – Onshore Employment Intermediaries: False Self-Employment –arrives accompanied by Revenue reassurances that it will not be seeking to target legitimate businesses or the genuinely self-employed, such as skilled independent professionals contracting through intermediaries.
The early signs are that the Revenue will be using three key criteria for assessing self-employment: supervision, direction and control. The new proposals will not apply where none of these criteria are met; however, where they are, the worker will be considered as the intermediary’s employee.
The document states that the planned strengthened legislation will not affect PSCs any differently to the current agencies legislation, whereby they fall into the exemption category.