Deadline Day For The HMRC New Reporting Requirements

In 2014, Baxter Personnel encountered a number of recruitment agencies trying to undercut their rates. Clients were been offered disturbingly lower rates on several occasions with regards to the recruitment of staff. The only possible ways other recruitment agencies were able to do so was to either make a loss in profits or through a tax avoidance scheme which is been ran to reduce costs and increase their profits.

From the 6^th April this year, HMRC made it a statutory requirement for all recruitment agencies to report all payments made with regards to their supply of staff, where they don’t deduct taxes  and national insurance contributions at source.  The reports must take place every 3 months of all workers they place with clients where they don’t operate a PAYE system. The first of these reports is due today (5^th August 2015) for the three months between the 6th April to the 5^th July 2015.

Failing to file these reports can land recruitment agencies in deep water with the HMRC, as fines will be issued to those who continue to not apply. For the first offence, agencies will be fined £250, with the total amount rising up to £1,000 for any further offences.

The following reporting regulations won’t affect Baxter Personnel, as all staff members are paid through the PAYE system, so all workers are automatically enrolled into paying the correct amount of tax and national insurance contributions. However for some recruitment agencies, they might start to feel the strain on their company as they have not previously operated in this way.

HMRC will also make an assessment for any unpaid tax and national insurance contributions for recruitment companies who continue to not apply to these regulations.  The recruitment firm, Reed were one of the first companies to feel the repercussions from these regulations. It was revealed that between 1998 and 2006 they failed to pay any UK taxes on their temp’s travel expenses after arranging a payment scheme where travel reimbursements were arranged separately from their salaries.

For Baxter Personnel, their name continues to remain clear for any controversial headlines such as ‘Tax Avoidance Scheme‘ even if it means that they need to run their rates at a higher cost.  Baxter Personnel welcome these new regulations and are happy to see that the HMRC continue to clamp down on tax avoidance. It has become a huge issue that taints the recruitment industry and needs to be put to rest so that professional agencies like ourselves that follow the correct requirements can benefit.

The next reporting date for agencies is due on the 5^th November, for the 3 month period between the 6^th July and the 5^th of October.  For further information regarding HMRC’s Employment Intermediaries Reporting Requirements, please visit their website here.