Strict new HMRC reporting requirements for recruitment agencies placing temporary/contracting staff have been criticised as an “onerous” burden by a Nottinghamshire tax expert.

The new requirements will oblige all recruiters ‒ and other employment intermediaries ‒ to provide details about all staff placed by them if these staff are not treated as their own employees because their PAYE is operated elsewhere. This would apply to all staff working through Umbrella Companies and to those who are not under the agency’s control, such as limited company contractors.

Reports must be submitted to the Revenue on a quarterly basis from 5th April.

Simon Browning, a tax partner at the Nottingham office of the accountancy firm UHY Hacker Young, said that the new reporting system would generate “an awful lot of additional work” for agencies that place temporary/contact staff whose PAYE is covered elsewhere, such as an Umbrella Company.

He added: “Agencies will be required to provide detailed information about individuals as well as explain why they have not been treated as an employee and paid through PAYE. Already the guidance has come under criticism for being too onerous for agencies and HMRC’s apparent lack of regard for concerns that have been raised. The penalties for not complying with these new regulations can also become quite significant, reaching £1,000 per quarter for those totalling three or more offences in a year.”

Agencies are not used to processing the additional information, Mr Browning explained, the quantity of which he described as “onerous”; therefore, the agencies may require the input of professional advisers.

The reporting requirements will not extend to entertainers such as musicians, actors, singers, or to photographic, fashion or art models.

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