Her Majesty’s Customs & Excise (HMRC) has clarified the position of employment agencies when placing a jobseeker with a client, where the worker provides those service through a company.

In a statement, HMRC said: “Provided that the employment business has not, since 6 April 2007, been directly or indirectly involved in the jobseeker obtaining the company, then the employment business will not be liable for any PAYE or National Insurance debt under the transfer of debt provision should it subsequently transpire that the jobseeker’s company is a managed service company (MSC). In practice this situation is most likely to occur where a jobseeker who already provides their services through a company approaches an employment business.”

Marilyn Davidson, director at the Association of Technology Staffing Companies (ATSCo) told Recruiter that she welcomed HMRC’s clarification. “This should reassure agencies that they don’t need to worry about debt transfer, where people are already working through a personal service company,” she said.

John Brazier, managing director of the Professional Contractors Group commented: “This means that agencies don’t need to ask any questions of contractors, who already have their own limited companies once the company’s name is supplied, and it should ease the barrage of requests for information that agencies send to our members simply to protect themselves from debt transfers.” 

HMRC warned that agencies could still be potentially liable where the service provider was a managed service company provider (MSCP) by virtue, for example of referring a jobseeker to that service provider (since 6 April 2007),  and was “involved with” the workseeker’s company, thereby making it [the jobseeker’s company] an MSC. (See Recruiter 3 October, p30.)

HMRC said it proposed to publish further guidance shortly to help employment businesses mitigate their risk where they use preferred supplier lists.