A question for PAYE experts and/or HM Revenue & Customs

No escape

Whilst trawling around the Internet and looking at the question of Town Hall Tax Dodgers (© Eric Pickles MP) Mr Mustard came across

The Social Security Contributions (Intermediaries) Regulations 2000

which came into force on 6 April 2000. They are quite short, only 8 pages, but are something of a specialist read and so Mr Mustard needs some help as he left the Inland Revenue in about 1980. You can find the whole text by googling if you want to read it but you might find the first part of the explanatory notes sufficient for you to see what Mr Mustard is driving at.

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations, which come into force on 6th April 2000, make provision for ensuring that social security contributions payable in relation to employed earner’s employment remain payable notwithstanding the existence of arrangements whereby the services of the worker for another person (“the client”) are performed through another person (“the intermediary”) and not pursuant to a contract of employment between the worker and the client.

 

Regulation 1 provides for citation, commencement and effect, and regulations 2 to 5 contain definitions.

Regulation 6 provides that, where the worker’s services are carried out in pursuance of arrangements involving an intermediary, the worker shall be treated, for the purposes of social security contributions in respect of a calculated amount of payments or benefits made or provided under the arrangements, as employed in employed earner’s employment by the intermediary, and the intermediary shall be treated as the secondary contributor for those purposes. The regulation also provides that an officer of the Board of Inland Revenue may make a decision on whether the regulation applies in a particular case.

Now it appears to Mr Mustard that if you have an arrangement where you have the following money chain:

Barnet Council to Hays HR

Hays HR to Employee Service Company Ltd 

Employee Service Company to Employee

that one of them must make a National Insurance deduction and Hays HR and the Employee Service Company both appear to be liable to pay the National Insurance.

Any explanation of this legislation, in simple terms, would be gratefully received.

Yours frugally

Mr Mustard