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HMRC internal manual

Employment Status Manual

Particular issues: interaction with the agency legislation

Section 134 ICTA 1988/Part 2 Chapter 7 ITEPA 2003

Regulation 2 and paragraph 2 in column(A) of Part 1 of Schedule 1 Social Security (Categorisation of Earners) Regulations 1978 (SI 1978 No. 1689)

Paragraph 24 Schedule 12 Finance Act 2000/Section 48(2)(a) ITEPA 2003

Regulation 12 SI 2000 No. 727

The intermediaries legislation does not affect the application of the agency legislation. Therefore, when a worker is engaged in circumstances in which the agency rules apply, any remuneration that the worker is paid in respect of work done should continue to be taxed as employment income and be subject to Class 1 NICs.

Where an individual is engaged through an agency the agency legislation will normally apply and any payments he or she receives will be chargeable to tax under Schedule E/as employment income and subject to Class 1 NICs. However, this will not always be the case. For example, the agency legislation only applies where there is control as to the manner in which the worker provides his or her services. If this criterion is not satisfied then the legislation will not apply. In such circumstances the intermediaries legislation may apply to the income received by the agency in respect of the worker’s services. It will only apply if the conditions set out at ESM8130 are all met.