The following Employment Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
A worker who offers his services to a number of different clients may choose to sign up to an agency who will seek work on his behalf. The work secured for the individual by the agency may only be hours in duration or it may go on for months. Whatever the duration, the worker has a contract with the agency rather than with the individual clients. The agency generally bills the clients for the worker’s services rather than the client paying the worker direct. The agency then pays the worker an amount as agreed in the contract between them.
The agency is responsible for assigning jobs on hand to the various workers it has under contract. Agencies are particularly common in the nursing, domestic care and temporary work sectors.
Although the employment status tests (see the Employment status tests guidance note) may suggest that this sort of arrangement is not an employment relationship, it may come within particular tax provisions in ITEPA 2003, ss 44 and 688 (the agency provisions) and NIC provisions in SI 1978/1689, Sch 1, Part I (the categorisation regulations). Those provisions can apply to treat the agency worker’s income as employment income and, in most cases, make the agency responsible for the operation of PAYE on that income and make the agency liable to secondary Class 1 NIC in respect of the worker’s income.
See ESM2001 onwards.
The agency rule
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