Employment Status Verification
Onshore Employment Intermediaries: False Self-Employment
Since the introduction of the Onshore Employment Intermediaries legislation for False Self-Employment was introduced, eQuidity has been providing a solution to recruitment businesses and end clients to help establish the correct employment status of their contracted workforce.
The Chancellor stated in his Autumn Statement on 5th December 2013 that “We’re going to tackle the growth of intermediaries disguising employment as false self-employment, depriving workforces of basic employment rights like the minimum wage in a bid to avoid employer national insurance.”
According to the consultation document, published on 10th December 2014, HMRC has evidence of a substantial and growing number of people who are falsely self-employed.
The legislation became effective on the 6th April 2014. From this date intermediaries are liable for tax and NICs relating to affected workers.
The sectors that the consultation mentions as being the ones on which false self-employment practices are most prevalent include broadcasting, marketing, hospitality, construction, media, creative, security.
What the legislation means to you as the intermediary
With effect from 6th April 2014 changes to section 44 of Chapter 7, Part 2 of ITEPA 2003 mean that where a worker is provided to an end-user client via an intermediary, the worker is to be treated for income tax purposes as being employed by the Intermediary. Therefore, the Intermediary is responsible and liable for the payment of PAYE and NICs in relation to all remuneration receivable by the worker in consequence of providing the services.
How can eQuidity help?
eQuidity has established a process that will help determine the correct employment status for all workers and will indicate whether the worker is self-employed or employed for the assignment they are booked for.
We then provide a comprehensive report to the client for each worker detailing our recommendations.
eQuidity provides the important link between the worker and the client to help establish the correct treatment of the workers pay and to limit the exposure the client has to not only unpaid taxes but the possibility of Debt Transfer.