TT223: Employment Intermediaries – The New Rules Explained!

July 21, 2015
Employment Intermediaries

From 6 April 2015, many labour suppliers are subject to new quarterly reporting rules and must send information to HM Revenue & Customs about workers where they do not operate PAYE.  The rules have some surprising consequences for those who may not even realise they are affected.

Employment Intermediaries must return details of all workers they place with clients where they don’t operate Pay As You Earn (PAYE) (and RTI returns have not been made) on the workers’ payments. The return is a report (or reports) that must be sent to HM Revenue and Customs (HMRC) once every 3 months. The first deadline is 5 August 2015 for the reporting quarter 6 April 2015 to 5 July 2015 – so if you are affected you should act now!

If you only introduce workers to clients or supply workers to other intermediaries, and you are not involved in any of the arrangements that follow, you will not need to make these returns to HMRC.

What is an Employment Intermediary

The obligation is on employment intermediaries who are agencies. Agency is defined as a relationship where an individual (“the worker”) personally provides services to another person (“the client”) and there is a contract between the client and a person other than the worker (“the agency”) under which services are provided.

Employment Intermediaries are defined as a person who makes arrangements under or in consequence of which:-

  • An individual works for a third person, or
  • An individual is, or is to be, remunerated for work done for a third person.

We are told that a personal service company is outside the scope of these new rules if it only acts as an intermediary for one person (its owner/director).  However, if a personal service company provided other individuals, it would be caught by the new rules.


You must send HMRC your report (or reports) by each reporting period’s deadline or you may receive a penalty.

Reporting period Deadline date Date by which you can replace a report
6 April to 5 July 5 August 5 November
6 July to 5 October 5 November 5 February
6 October to 5 January 5 February 5 May
6 January to 5 April 5 May 5 August


If your report is late, incomplete or incorrect you may be charged a penalty.

Automatic penalties have been introduced for not sending a report or for sending a late report. These are given based on the number of offences in a 12-month period. These are:

  • £250 – first offence
  • £500 – second offence
  • £1,000 – third and later offences

If there are 12 months or more between offences, you will only be charged £250 for the first offence in the new 12-month period.

Where there is continued failure to send reports or to send reports late you may receive a penalty every day that you don’t send a report.

If you think that you may be caught by the new Employment Intermediary Rules and Reporting requirements, please contact your Barnes Roffe partner immediately for further guidance.

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