The following Owner-Managed Businesses guidance note by Tolley provides comprehensive and up to date tax information covering:
From 6 April 2017, where a public sector body uses the services of an individual supplied by an intermediary (generally a personal service company (PSC) or a managed service company (MSC)), that public sector body, or an intermediate procurement agency it may use, has to consider whether the new public sector version of the intermediary rules apply.
Normally, where a worker provides his services to an end client through a PSC or an MSC, it is up to the PSC or MSC to decide whether the worker would be an employee or office-holder of the client if he were engaged directly. If he would be such an employee or office-holder then the PSC or MSC has to calculate a deemed employment payment (or payments) which it is treated as making to the worker and it has to account to HMRC for income tax and NIC in respect of the deemed payment(s). For more on the normal rules, see the Personal service company rules and Managed service companies guidance notes.
From 6 April 2017, where the end client is a public sector body, the decision as to whether the worker would be an employee or office-holder if engaged directly is made by the public sector body, as does the responsibility for calculating a payment deemed to be made to the worker (the ‘deemed direct payment’) and accounting to HMRC for tax and NICs on such payment. If the public sector body does not pay the intermediary directly, the responsibility for calculating the deemed direct payment and operating PAYE passes down the payment chain to the entity that does pay the intermediary’s invoices.
These rules take precedence over the Construction Industry Scheme.
HMRC has published a free-standing technical note and guidance in support of these deemed direct payment rules.
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