Reporting obligations for agencies under the Finance Bill 2014
The Finance Bill of 2014 imposed a raft of new reporting obligations on agencies engaging any workers who are paid outside the conventional PAYE model. Agencies must now submit quarterly returns to HMRC on all such workers. These include:
A: Self-employed individuals.
B: Individuals engaged through a partnership.
C: Individuals engaged through a limited liability partnership.
D: Individuals engaged through a personal service company or limited company.
E: Any non-UK individuals.
F: Individuals engaged through another party operating an HMRC-compliant PAYE model.
The Umbrella option
Of special interest to agencies wishing to reduce the new administrative burdens to a minimum is category F. Why? Because it includes Umbrella Companies – Umbrella Companies such as Crystal Umbrella that meet all the safety requirements: based in the UK and complying fully with UK tax obligations, operating a pure PAYE model on all the workers it supplies (who all have employment status with the Umbrella), and submitting accurate and timely Real Time Information Data to HMRC.
Any agency that fails to comply with the new HMRC reporting regime will be subject to penalties and even public “naming and shaming.” Being late, or sending incomplete or inaccurate submissions, can now land agencies in hot (and expensive) water.
What agencies must now report each quarter
Let’s itemise the details that agencies are now required to submit on all workers who are paid outside the standard PAYE model. Five basic ones are obligatory:
1: Full name and address, including postcode.
2: National Insurance number.
3: Reason why PAYE was not operated by agency/intermediary.
4: Start date of work with client.
5: End date of work with client.
That might not seem too onerous. However, these five items are the tip of a data iceberg. Some or all of the following are also required:
6: Gender and date of birth (where NINO is not known).
7: Unique taxpayer reference (UTR) for members of a partnership or self-employed individuals.
8: Name of each company or partnership if via a bureau.
9: Full name or trading name and address of who you have paid (i.e. the worker’s partnership or company).
10: Total amount paid for the worker’s services.
11: Whether or not VAT was applied.
12: Currency you paid in (converted into Euros or GBP if necessary).
13: Companies House registration number for all workers engaged via limited companies.
Slashing the reporting burden with an Umbrella
The administrative burden for agencies as far as HMRC reporting goes has now been massively multiplied. However, a solution is to take the Umbrella Company option.
Reputable UK-based Umbrella Companies such as Crystal Umbrella can slash the administrative burden at a stroke. Because all the workers they supply have full employment status and are paid on a Revenue-compliant PAYE basis, items 6 through 13 no longer apply. The Umbrella will supply agencies with the first five details and, once submitted, that will complete the reporting obligations. There will be no need to supply details of payments to each worker because the Umbrella will do this routinely as part of its Real Time Information (RTI) PAYE submissions.
If you want to minimise the risk of your agency being penalised and radically cut the new administrative burdens, choosing a competent and reputable Umbrella to collaborate with is one of the wisest options you can take.