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ESM2125 | Employment Intermediaries Reporting: Returns - What they must contain about payments

From HM Revenue & Customs · Employment Status Manual

Regulation 84F Income Tax (Pay As You Earn) Regulations 2003

Income Tax (Pay As You Earn) (Amendment No.2) Regulations 2015

In addition to the identity information for the specified employment Intermediary and the worker, the specified employment Intermediary will usually have to tell HMRC details about the payment that they make to the worker, or a third party in respect of, or in connection with, the services the worker provided. The obligation applies where:

  • a payment is made to an individual (i.e. worker)

  • that payment is in respect of, or connection with, the services provided by the worker to the client

  • that payment is not included in an RTI return when it was made because:

(i) a reporting failure has occurred, or

(ii) there was no need to include the payment on the RTI return as the individual is not an employee, nor are they required to be treated as an employee to tax and NICs purposes.

So, if the worker has been paid for the services provided to the client and those payments were included in an RTI return (including a RTI return completed by an Umbrella company or another agency supplying the worker to the specified employment intermediary), the specified employment intermediary is statutorily only obliged to tell HMRC about the worker’s identity and their engagement details. The specified employment intermediary is not obliged to pro-vide HMRC with details about the actual payment.

Where RTI has not been operated in respect of payments to the worker for providing their services to the end client, the specified employment Intermediary has to tell HMRC:

  • The name and address of the person they paid for the supply of the worker’s services

  • The total amount of the payments made by the specified intermediary to the per-son in the tax quarter (this can be the aggregate amount in relation to that person or they can tell us about each payment if that is more convenient)

  • The reason they have not operated PAYE/RTI when the worker was paid (HMRC provides a limited tick list of reasons to choose from)

  • If the reason is that the payments have been made to a limited company, the name and company registration number of that company

  • Whether the amount paid includes VAT.