Introducing Stricter Agency Rules
Agency rules have become tougher and are having a huge impact on some businesses already.
Basically, the rules mean that any payments by an agency to a worker is classed as employment income.
So unless you can prove that you are self-employed, you will be liable to PAYE tax & NI.
The definition used for an agency is ‘any organisation that acts as a conduit between the worker and the person they work for’.
IR35 was not the big success that HMRC anticipated as they found it almost impossible to prove that people were not self-employed, especially when contracts contained a substitution clause stating that the worker could send another person in their place.
However, the new agency rules mean that this clause is to be disregarded when deciding employment status and there is some concern that this will effect people who provide services through their own company. Could the company now be classed as an agency?
The Solution
Basically, we suggest you keep the substitution clause in your contracts as this will still protect you from IR35 but we also suggest that you avoid the agency rules by not taking any work through an agency where possible.
Vikki