This legislation took effect from 6 April 2014 to target income tax and NIC avoidance schemes that involve the use of offshore companies or offshore employment intermediaries supplying workers to a hirer via a UK intermediary. Prior to this, where a worker is supplied by a non-UK agency, it was the UK based employer that had responsibility for deducting PAYE and NIC. This caused problems as there can be a chain of agencies involved with the end hirer dealing with a UK based intermediary, and unaware of an offshore element in the supply chain.
Therefore, the new legislation is designed to make the UK intermediary (the last in the chain) the employer for PAYE and NIC purposes. In circumstances where there is no UK based intermediary, the UK based end hirer is responsible for the PAYE and NIC deductions for the worker.