What is ITEPA and why does it mean recruitment agencies need my personal details?
There is a perception that too many people are using loop holes to avoid paying their “fair-share” of tax and HMRC shares this opinion. To help counteract this, they have put in place several new pieces of legislation that affect the recruitment industry.
Income Tax (Earnings and Pensions) Act , known as ITEPA, came into effect in 2003. Amendments came into force in 2014 regarding onshore and offshore intermediaries and another comes into force on the 6th April 2015. This latest reporting element affects contractors themselves.
What does it mean for contractors?
All recruitment agencies that make gross payments to their contractors (ie those who are not paid under PAYE) have to submit a quarterly report detailing the payments made to you. This includes some potentially sensitive information, but it is a legal requirement of the agency.
I work through an umbrella company and I’m paid PAYE. Do I still need to supply this information?
Yes, the agency will still have to supply your worker details to HMRC but they won’t need to submit details of how much you have been paid.
What information is required?
- Your full name (including any middle names)
- Your address (including postcode)
- Your NI number OR gender and date of birth
- A unique taxpayer reference (UTR) for people who are self-employed or members of a partnership. This doesn’t apply to people working through a PSC
- Your limited company details (including registered address). This includes umbrella company details
Can I refuse to give these details?
In theory, yes you can refuse however if you do so then the agency will not be able to employ you. If a recruitment agency fails to supply this information about anyone they have paid then they will be liable for automatic penalties. Most agencies will have a clause in their contracts that state you have to provide all required information in order for them to fulfill their statutory obligations. This information falls within the requirement.
What happens to my details?
The agency will be required to submit this information to HMRC on a quarterly basis. They are also required to keep these details for at least three years. It will, of course, be covered by the data protection act so the details will be held securely.
Will I have to submit a report myself?
In most circumstances you won’t need to do anything other than supply the information to the agency. If you run a personal service company (PSC) with more than one worker, including sub-contractors, then you will be acting as an intermediary and will be required to submit a report.
Where can I read the legislation?
The full legislation can be found at http://www.legislation.gov.uk/uksi/2015/171/pdfs/uksi_20150171_en.pdf
HMRC’s have also issued guidance on this which can be found here https://www.gov.uk/government/publications/employment-intermediaries-reporting-requirements
If you have any queries about the legislation, even if you are not currently working as a contractor through us, please just get in touch.