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Revised proposal to offshore employment intermediaries to increase burden on recruiters

Posted on by Jane Fretwell

Following HMRC’s review of the use of offshore employment intermediaries, the Government announced at budget 2013 that it would be strengthening the legislative obligations to ensure the correct income tax and NICs are paid by offshore employment intermediaries.

The original consultation closed on 8 August 2013. However following feedback from various stakeholders that the original legislation may encourage offshore employers not to comply with their tax responsibilities (as they are outside UK jurisdiction) and also that there would be an additional burden on UK employment agencies, the government has revised its proposal.

The original proposal stated that the offshore employment agency would be responsible for accounting for NIC and tax. In the case of a default the obligation would pass to the intermediary closest to the end user. In the case of a second default by the intermediary the debt would transfer to the end user.

As a consequence of the above concerns raised by stakeholders, the Government concluded that it was reasonable to expect employment businesses and agencies to undertake due diligence on offshore agencies.

Therefore the revised proposal states that all obligations will fall immediately and wholly on the UK employment agency closest to the end user, and in the case of a default the debt will not be passed on to the end user. Where there is no onshore employment agency, the end user will be responsible for the accounting and payment of employment taxes.

This will have far reaching consequences for the recruitment industry as it not only increases the administrative burden placed upon recruiters but will also require significant contractual changes for employment businesses acting as intermediaries.

HMRC has confirmed that both the NIC’s and tax legislation will be effective from 6 April 2014 leaving recruiters little time to put the necessary procedures in place.

As a UK based umbrella company, Simplyco strictly comply with all UK tax and employment legislation.

Simplyco are expert contractor accountants and give the best advice around when it comes to accountancy and tax. To find out more about how we could help you, please give us a call on 01900 898 440 or email

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