Question:
The end to Employment Agencies ?
Answer:
If you are working through an agent ( as the vast majority of Contractors
in the IT and engineering sector are) then you will be subject to
"supervision, direction and control" Note the FRES recommended contract
for the supply of Limited Company Contractors states: "Contractors
provided by the agency to the Client are deemed to be under the direction
and control of the Client for the duration of the Assignment"
As such you will be caught by these new rules and the Inland Revenue
state:- "The changes are not designed to prevent a worker providing his or
her services through a third party, but should remove any tax/NICs
advantages of doing so"
You may conclude that there will be no benefit in providing your services
through a Limited Company with the attendant cost and time implications
and accept that you will be employed as a temp worker with the increasing
levels of "workers rights" available to you. Who will bear the cost of
these, together with the increased tax burden, is uncertain. If you are in
an Industry with skill shortages it may be you can pass on the full impact
to your client/agency. In other areas it is likely to mean a real cut in
disposable income.
If you are able to bid for work which will not fall under these rules (and
the worked examples give some indication of how this might be achieved) it
would appear that you can apply for certification and receive payments
gross. This would also allow you to receive payments gross on contracts
falling under the agency scenario, but the penalties for non compliance
are likely to be draconian.
The use of certification also allows larger companies (design and software
houses) providing the same services as many existing Contractors i.e under
the "supervision, direction and control" of the client to receive fees
gross as it will be paying its workers on that contract Schedule E
(deducting tax and NI)
