HMRC internal manual

Employment Status Manual

ESM2045 - Agency and temporary workers: agency legislation - provisions from 6 April 2014: transfer of PAYE and secondary employers NIC liabilities (6 April 2014 onwards)

Applicable from 6 April 2014

Chapter 3A, Certain Debts of Companies under Chapter 7 of Part 2 of ITEPA 2003

Section 97Z of the Taxes Management Act

If an employment agency is provided with documents by another party to demonstrate the agency legislation did not apply to a worker’s arrangement, and it is found those documents were fraudulent (and in reality the agency legislation did actually apply to the worker’s arrangement), then the responsibility for operating PAYE and paying Class 1 employees/employer’s NICs on any remuneration received by the worker in consequence of providing their services, will be placed upon another party other than the agency. For further details, see ESM2044 - Fraudulent Documents.

If a limited company is treated as being the employer of the workers (via the provisions of the agency legislation applying) and that company fails to pay the relevant PAYE tax and Class 1 employees/employer’s NICs over to HMRC, then HMRC may hold the directors of that company personally accountable for paying the tax and NICs, plus any penalties imposed and interest accrued. For further details, see ESM2046 - Directors liability for paying PAYE debt.