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Surprisingly, one of the least commented upon aspects of the new intermediary reporting requirements is the fact that many deals where the contractor services are performed overseas will need to be included in the reports made every quarter to HMRC.

According to HMRC’s guidance, you must send a report if at any time in a reporting period you:

Recruitment Agents involved in international contract recruitment often outsource the contractual relationship with the individual performing the duties of the contract to an international umbrella company. By doing this, there is an impression in some quarters that the whole risk burden of the deal has been passed on. This takes no account of the fact that it is normally the agency that signs the Master Agreement with the client and that at any rate in some countries (e.g.

From the 6th April, HMRC are introducing legislation to tackle overseas businesses (including umbrella companies) that are paying neither class 1 nor class 2 National Insurance and in addition are not deducting tax appropriately from the pay of temporary workers. In such a scenario where the direct employer has not paid, the tax charge will be moved to an onshore engager of labour.

What is the Objective?

In the Chancellor’s Autumn Statement in December 2013, he announced the Government's intention to eliminate the problem of false self-employment through intermediaries.

What is the Objective?

Recruitment agencies who supply contractors to no income tax countries (e.g. Dubai, Abu Dhabi or Saudi Arabia) or to low income tax countries (e.g. many countries in South East Asia or perhaps Russia) often sell the deal to candidates on the basis of the tax free income or low tax income that they can generate if they work there.

The final version of the legislation for the new Statutory Residence Test will be confirmed in the Budget by the Chancellor of the Exchequer in March and will have an impact on the international Recruitment Sector (both Contract and Permanent) by providing greater certainty to candidates about their UK tax residence status if they decide to leave The UK for a temporary period but retain personal and business interests in The UK and continue to spend a certain amount of time there.

I occasionally get the feedback that an over-emphasis on compliance and sustained commercial success can be mutually exclusive in the Contract Recruitment Sector. Most people in the sector acknowledge that there should be at least some attempt to manage risk but there do seem to be many who feel that it has a negative impact on business generally. This negativity usually manifests itself in the following ways:

It is occasionally necessary for Agencies to incorporate a section in their Tender Document on their policy with respect to managing contractor risk. This is increasingly the case in most of Continental Europe where most suppliers of fixed term personnel are Consultancy Companies or Bodyshops. If clients are confronted with a business model that they are not very familiar with they are very often focussed on ensuring that they are contracting with organisations who have their best interests at heart.

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