Healthcare employment agency K5K has been ordered to pay a £260,991.21 tax and National Insurance bill after its appeal regarding Section 44 legislation was dismissed at a First Tier Tribunal hearing.
It’s a verdict which highlights HMRC’s increased focus on agencies deemed to have facilitated what’s known as ‘false self-employment’.
The determinations and decisions covered those individuals whom K5K contended were engaged through their individual PSCs, whilst HMRC’s view was that the individual workers were deemed employees of K5K by virtue of the Section 44 agency legislation and the equivalent National Insurance contributions.
‘Section 44’ was introduced in 2014 to stop employment agencies from supplying sole traders whose employment status reflects employment, rather than self-employment. If these rules are broken and ‘false self-employment’ is identified, the employment agency is liable for unpaid tax and national insurance contributions that ought to have been paid under an employment relationship.
This case shows that placing workers under the correct employment status is essential for employment agencies.
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