Contractors' Questions: Do HMRC's reporting requirements cover pay data?

Contractor’s Question: In this ContractorUK article on HMRC’s reporting requirements for onshore intermediaries, it states “there is no legal obligation for the agency to report the payment”.

But on the HMRC website and template, it says “If Worker engagement details where the intermediary didn’t operate PAYE is ‘A’, ‘B’, ‘C’, ‘D’ or ‘E’ you must include: amount paid for the worker’s services.” So this means that the agency does have to report on the payments made. Which is correct, HMRC or CUK’s article? Please clarify; the August 5th deadline for submission is today.

Expert’s Answer: The ContractorUK article that you cite refers to payments where PAYE has been operated by an intermediary e.g. an umbrella company.

In this case, the recruitment agency is not required to report the amount paid to HMRC; if PAYE has not been operated then the agency will be required to report it.

The reason for this is that HMRC can track PAYE payments made through umbrella companies via RTI whereas payments made to PSCs, for instance, cannot be tracked in this way. This should answer your question.

However, for your reference and while we are citing that ContractorUK article, it may be worth pointing out that HMRC’s guidance on the reporting requirements was revised after the guidance was published because many people had questioned the Revenue about the guidance's contents. The CUK article you refer to was published before HMRC's revisions.

Following a staffing body's press release on the reporting requirements, our company asked our contact at HMRC for clarification of the reporting position when an umbrella company has operated PAYE. The following was the HMRC officer’s response:

“If the Umbrella has operated PAYE on the payments to the worker for the services then there is no legal obligation to tell us the amount of the payment. The template will prompt an entry with an error message if you tick ‘D’ (as an umbrella can) rather than ‘F’ but it is possible and legal to file without the payment information and just the identity of agency, worker, start date and end date. We are finding this query coming up quite a bit and we are putting out an amendment to the guidance to explain this more clearly.”

The expert was Lisa Keeble, managing director of Contractor Umbrella.

Wednesday 5th Aug 2015
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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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