HMRC today published revised interim guidelines regarding Supervision, Direction or Control (SDC) which is designed to help you correctly apply agency legislation and new employment intermediaries’ travel and subsistence measures. It also provides examples to support this agency legislation around providing personal services and the conditions where the SDC legislation should apply. You can find the full document here.
There is much detailed content but we draw your attention to ESM2055a where it provides guidelines as to how to assess whether someone falls in or outside of SDC and whilst these are all sensible questions, there is no assistance as to how this should be documented. There is some brief explanation of what can be considered as SDC in relation to each engagement but surprisingly frequency of an activity is not a contributory factor.
To make the assessment you are advised to look at documentary evidence such as the contract, adverts and so on and also to gather facts from enquiries with people involved in the arrangements. The guidance questions it gives are:
- the services the worker was originally contracted to provide and what they actually provide or do
- who the worker works with, why and when
- where the worker works, why and when
- who checks the worker’s work, when and why – establish what has been checked, by whom, why and did any work have to be re-done
- whether the worker has been moved from one job to another – when, why and by whom
- in what circumstances the worker can refuse to do work and whether they have done so
- who the worker reports to, when and why
- whether the worker has had to seek guidance from anybody to do the work and if they have had to what guidance was required, who gave it and when
- It concludes that where there are procedures, methods and instructions which must be followed, it is likely the test for SDC will be met but they have clarified that complying with statutory requirements like health and safety does not indicate SDC as these must be followed by all workers.
These guidelines also included a reminder that whether or not the agency legislation applies, agencies must have in their power or possession the following information relating to each worker:
- identity details (which you already have)
- information about how they are paid and engaged (which you already have)
- reasons why income tax and NICs has not been deducted by the agency for workers paid gross, eg, umbrella workers or self employed (you may need to review this position)
- information about the business supplying the worker to the agency.
- And lastly for limited company workers, the ESM2051 applies and in case of public sector workers you will need to collect evidence to confirm the workers were following the guidelines of IR35.
We appreciate that this can be very confusing – if you would like any help, information or advice, please do not hesitate to contact Bradleys Accountants on 020 3507 0087.