If you are an IT contractor, you should be aware that HMRC has updated the official guidance for quarterly reports that intermediaries send about agency worker replacements and contractors without using the PAYE system.
HMRC has stated that the reporting requirements and guidance have been changed with the aim of reducing regulatory burden. Besides providing an overview of HMRC rules, agents, clients, workers and intermediaries now have their separate guidance that highlights why the rules were introduced and when.
HMRC has clarified the timeframes for submitting quarterly reports, which initially had a start date of November 2014 but has been changed to August 2015. However, in addition to this, the update also gives details on penalties for inaccurate and late reporting that IT contractors and other intermediaries should be aware of.
The regime, which also applies to incomplete reporting, covers a 12-month period and will attract a fine of £250 for the first offence, £500 for the second one, and £1,000 for subsequent offences. Just to make it clear for IT contractors, if 12 months lapse between offences, they will be liable to pay £250 as a penalty. However, HMRC warns that if an agency continuously fails to send in reports or files reports late, they could attract a daily penalty for each day that the report is not sent.
A new appeal system for the new penalties has been introduced by HMRC. For incorrect and incomplete reports, HMRC may apply manual penalties, which will be taken up on a case-by-case basis. HMRC also clarified that if an agency replaced the report before the deadline of the subsequent reporting period without being reminded, it will be taken into consideration when the penalty is decided.
The new guidance update also mentions the parties that don’t have to send reports. These include UK employers, parties providing workers to end clients without the involvement of a third-party, and paying workers through the PAYE system.