Details emerge over HMRC employment intermediaries dropbox

Wednesday 18 June 2014

APSCo has received details from HM Revenue and Customs (HMRC) about the much anticipated employment intermediaries dropbox.

It has been revealed that an email address has been set up for anyone wishing to report any model being promoted as an alternative to the changes to the employment intermediaries legislation.

This comes after continued calls for HMRC to create the email address to allow cases of false employment to be reported.

The new models designed to skirt around the legislation go by many names but are most commonly known as 'hybrid'.

While not all models are set up deliberately to avoid the law, if there is cause for concern, people are encouraged to provide details to HMRC.

The tax body expects copies of dubious contracts being offered to be sent to the email address in order for them to be reviewed.

APSCo learned that the new dropbox address is

HMRC has made it clear that this should not be used to report tax evasion, as there is a separate hotline for this to be reported on.

The creation of the new address is hoped to make things run more smoothly following the introduction of the employment intermediaries legislation.

Last month the Recruitment and Employment Confederation (REC) raised concerns about the changes, claiming market distortion has intensified since the new legislation came into force, making things confusing for contractors and the self-employed.

What's more, onshore employment intermediaries legislation has created problems for advisory bodies.

The REC said in a statement: "Schemes that rely on avoiding NMW obligations, processing inflated expenses claims or that push workers into single person umbrella companies leaving them powerless to take action if they are subsequently exploited are not models that we can, in good conscience, promote to our members."

To iron out concerns, the REC had a meeting with HMRC, in which the tax body acknowledged that there are shortcomings to the legislation.

Officials also made it clear that they are aware new avoidance models are being created and are working to tackle them.

Meanwhile, HMRC is speaking to major employers about the risks of engaging with suppliers that are part of new avoidance schemes,

However, there are still areas that need to be addressed, such as end-user liability for tax and National Insurance Contributions.

"Knowing they are not at risk of any financial liability, too many hirers are looking only at the bottom line price, regardless of the sort of avoidance models that are being put in place to achieve the figures," the REC said.

Furthermore, the continued creation of avoidance schemes, such as the Elective Deduction Model, is a source of unhappiness. While the new inbox will mean it's easier for such models to be avoided, the threat is still a real one.

The Freelancers and Contractor Services Association (FCSA), the REC and APSCo have all aired their concerns about the scheme.

The continued existence of such programmes create huge risks for end-clients and there is currently very little protection out there, according to Matthew Brown, FCSA non-executive chairman.

By Victoria McDonnell

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