Labour supply intermediaries 


A labour supply intermediary, such as a recruitment agency or employment business, is an organisation whose business is the supply of individuals to work for another organisation (often called the hirer or end user) in return for payment. 


In April 2014, HMRC changed the tax laws in response to the growing problem of false self-employment in the arrangements used by labour supply intermediaries. As a result of these changes, any intermediary supplying labour must now deduct PAYE tax and National Insurance contributions (NICs) at source from the wages of anyone they supply to an end user to work, unless the intermediary can prove to HMRC that the person they supply is genuinely self-employed. In other words, it is now the responsibility of the labour intermediary to prove that the person is genuinely self-employed. If they cannot do this, they must deduct tax at source. 


Quarterly reports must be made to HMRC of any worker whose pay is not having tax and NICs deducted, with an explanation as to why this is.





Opportunities to claim tax relief on travel and subsistence expenses have also been restricted, as these were being abused in order to avoid NICs.