The new law, set out in the Finance Bill 2014, amends the agency tax legislation and requires PAYE, including employers NICs, to be applied unless it is shown that the individual genuinely self-employed. In order to prove self-employment, the individual must not be subject to any direction, supervision or control for the assignment they are working on. This applies to all and any intermediaries including personal service companies with the agency contracting with the client liable. Debts of liable agencies can now be transferred to directors personally of those companies.
HMRC guidance on the interpretation of the terms is:
- Supervision means that someone oversees a person doing work (including helping and mentoring the worker), to ensure that person is doing the work required correctly and to the required standard.
- Direction means that someone makes a person do his or her work in a certain way by providing them with instructions, guidance or advice and coordinating how the work is done.
- Control means that someone dictates what work a person does and how they go about it and includes having the power to move the worker to another job.