The provisions of ITEPA 2003, s. 44 bring agency workers within the scope of PAYE. An agency worker is defined as a worker who:-
However, a person who obtains work through an agency or some third party is not treated as an employee if any of the following apply:-
Normally, where the agency supplies the worker, it will pay the worker itself, and so be responsible for operating PAYE. However, in the following circumstances, the client will be responsible for operating PAYE:-
For an agency worker, the client’s premises at which he renders his services will be treated as his base, or normal place of work. Any reimbursement of travelling expenses between his home and the client’s premises will, therefore, be taxable earnings to which PAYE should be applied, whether they are reimbursed by the client or the agency.
It should be noted that the payments to the worker are only deemed to be earnings for the purpose of operating PAYE. The effect of the legislation is not to make someone who would otherwise be treated as self-employed, an employee (see Employment Appeal Tribunal case of Ironmonger v Movefield Ltd t/a Deering Appointments (1988) IRLR 461).
Agencies or clients may be required to make a return on form P38A/P38A(F) of any payments to agency workers, giving details of the individual workers and the amounts paid to each.