Fears of fines for recruiters over latest HMRC reporting requirements

Confusion reigns among recruiters over changes that came into force from 1 April requiring them to submit new quarterly returns to HM Revenues & Customs (HMRC).

Wed, 8 Apr 2015

Confusion reigns among recruiters over changes that came into force from 1 April requiring them to submit new quarterly returns to HM Revenues & Customs (HMRC).

From the start of this tax year recruiters must record details of every contractor or temporary worker they place – even those who are not paid via the agency’s own PAYE scheme. The information collected must then be sent to HMRC in the form of a quarterly online report. First reports are due by 5 August 2015.

But according to Derek Kelly, managing director at umbrella company Parasol, some recruiters are confused over dates and deadlines.

In a statement he said: “We have been contacted by several agencies under the impression that the first return was due in on 6 April, rather than 5 August.  

“Conversely, others have thought there is absolutely nothing to do until August, when of course it’s vital that agencies begin recording worker data now.

“This confusion suggests that the government could have done a better job of communicating the detail of the changes to the recruitment industry, which is already drowning in red tape and administration.”

Julia Kermode, chief executive, Freelance & Contractor Services Association (FCSA), agrees. “I’m not sure HMRC have done a good job in communicating their reporting requirements legislation widely,” she told Recruiter.

But Kermode also expressed concerns about certain sectors, such as the events industry, that may not think the rules apply to them.

“I’m almost concerned about some sectors that aren’t really plugged into HMRC, where they perhaps use casual labour and temporary staff – like events. They could be affected and they might not even know yet.

“If you’re a company supplying audio/visual crew, for example, then you may be paying those staff but you might not know you need to report on them if they’re temporary staff,” she continued.

“They could be liable for fines if they don’t report on the temporary staff being used. I’m not sure everyone out there knows a) the definition of an intermediary and b) they themselves might be an intermediary.”

And according to Ben Grover, senior legal consultant at Lawspeed, those fines could be hefty depending on how HMRC applies the rules.

“Fines start at £250 and that’s per report. My understanding is a report is per person, so it could be quite significant.

“One of the only concerns is you have got to pay a lot of attention to filling in the form because it is quite possible to get a minor mistake [into the form] and potentially be fined for it,” he added.

“I don’t know how robustly they are going to administer the penalties in the first instance, especially if you have done everything you can to put in all the correct information, but the bottom line is the penalties are available to HMRC.”

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