This is a series with Jovan Pavlicevic (commercial director at forest accountants) we are running to help understand what April 6 has in store for recruiters. You can catch number five: LLP Salaried Partner Rules here, number four: Onshore intermediaries and this week we’ll continue the countdown:
#3 Offshore intermediaries
The BBC called foul 18 months ago when it was much publicized that employer’s national insurance wasn’t being charged on a vast number of workers, particularly supply teachers and locum nurses. This left the government with a bit of egg on face. There was public outcry, but to claw back these lost millions would mean one branch of government effectively punishing another – HMRC vs schools and the NHS, what a shambles. Still, it would give us something to write about!
So the offshore intermediaries act was put in place and becomes law with the upcoming tax year. It means that the international/offshore umbrella companies that were used to make this saving are now subject to employer’s NI. This is another piece of tax law that’s driving a cost increase across the supply chain in all sectors.
As well as the introduction of employer’s NI, HMRC have introduced various other aspects, like relatively onerous reporting requirements for agencies and the potential of debt transfer right through the supply chain to agencies and end clients. These measures will drive compliance from the top of the chain down, and point to one fact: HMRC are very serious about getting their hands on that money. So as always, it’s caveat emptor. If you’re sourcing cheap labour, the buck no longer stops with your supplier – it could very well stop with you. Look out for solid qualifications and make sure you’re vetting your supply chain.
Until the next instalment, sleep tight!
