November 14, 2022
Eight years after the Onshore Employment Intermediaries: False Self Employment Legislation (s44 ITEPA 2003) coming into effect, HMRC earlier this year successfully challenged the engagement of personal service companies (PSC’s) through a recruitment agency where they argued that workers supplied through their own limited companies (PSC’s) were caught by this legislation making income tax and national insurance contribution payable on the income.
In making this challenge HMRC used the 2 fundamental changes brought in by s44 as key to their argument, namely:
In finding in HMRC’s favour the judge made the following comments:
“We conclude therefore that all relevant workers (notwithstanding their personal companies) were contracting in their personal capacity as the named agency worker in the worker contracts with the appellant and none of the personal companies were a party in the contractual chain in relation to the supply to any of the end clients”
This decision makes it of paramount importance to fully understand the legislation and the need for written contracts which are correctly drafted.
The main issues to be taken from this case are:
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