In April 2015, following a long consultation process, HMRC decided to implement the Intermediary Reporting which needed to be completed by all recruitment agencies on a quarterly basis. Agencies are required to submit a nil return if the agency does not provide contract or temporary staff or if no payments have been made to self-employed/sole traders, limited or umbrella companies.
However, nearly 3 years since the Intermediary Reporting came into effect, TBOS is still engaging with existing recruitment agencies who have used previous accountants and found that this reporting was never completed and are unaware that this is something that needed to be done.
Below are some questions that are asked when we speak to our recruitment agency directors to hopefully highlight why this reporting is important:-
- What Is The Intermediary Reporting?
HMRC realised that following the implementation of RTI (Real Time Information) on PAYE payrolls, they could collect the information on salaries and taxes on temporary and contractors who were paid through an agency payroll but not the information on payments to self-employed/sole traders, limited or umbrella companies. HMRC were also concerned about some agencies declaring false self-employment or paying to offshore companies. In order to combat this, they put into place that recruitment agencies needed to provide reporting each quarter for details of payments made to contractors who were not on the PAYE payroll which would tie back to the RTI reporting and personal tax returns when the candidates paid their taxes.
- What Information Is Required To Be Reported On?
The reporting has to be submitted based on a template which can be found on the HMRC website and needs to include:-
- Workers Name, Date of Birth, Gender, National Insurance Number, Address including Postcode
- What third party method the candidate used to be paid (i.e. self-employed/sole trader, limited or umbrella company)
- Third Party details (Company Name and Registration Number
- Amount paid during period
- How Often Do You Need To Submit The Reporting?
The Intermediary Reporting needs to be submitted online through the HMRC Government Gateway on a quarterly basis and is due 30 days after the reporting periods (6th April to 5th July, 6th July to 5th October, 6th October to 5th January, 6th January to 5th April).
- Whose Responsibility Is The Submission Of The Reporting?
It is the responsibility of the directors of the recruitment agency to submit the returns on time and correctly, although often the data will be produced by the accounts department, accountants or the pay-and-bill provider. Even if the agency does not provide contract or temporary staff or if there have been no payments made to self-employed/sole traders, limited or umbrella companies within that period, a nil return still needs to be submitted.
- What Are The Fines If The Reporting Is Not Submitted?
HMRC are issuing fines to agencies who fail to submit the reporting within the deadlines or with incorrect information. The penalty amounts are based on the number of offences within a 12-month period, with the 1st offense being £250, 2nd offense being £500 and 3rd and later offences being £1,000. If the agency fails consistently to submit the reporting on time or correctly then HMRC can impose a fine of £600 for every day the reporting is late.
TBOS manages the full back office and accounting services of the agencies it looks after, including compiling and submitted the quarterly Intermediary reports. TBOS ensures that the agency is paying the contractors to correctly registered limited or umbrella companies and make the necessary recommendations should any contractor want to be paid through a non-viable method. TBOS also submits all of the nil returns for the perm-only agencies to ensure they are also remaining compliant with the Intermediary Reporting regulations.
For more information on how TBOS can help manage your back office and accounting needs, including Intermediary Reporting, please contact our office.