Your reports must include details of your agency:
- Your agency name
- Head office address, including postcode
- PAYE reference number (if you have one)
The contractors’ details
You must include details of any workers for whom you don’t operate PAYE and whose services you made payments for during the set quarterly reporting periods. This includes all of your contractors who were paid via an Umbrella Company such as Key Portfolio.
Let’s clarify: which contractors need to be included on each report?
Our understanding is that HMRC is interested in the contractors you made payments for during the reporting period. In other words, it comes down to the day the money left your bank account, not the day the money was received by the recipient.
Your reports must include the following details for each worker:
- Middle name (if known)
- Address line 1
- Address line 2
- Address line 3
- Address line 4
- National Insurance Number (if they have one)
- Gender (if they don’t have a National Insurance Number)
- Date of birth (if they don’t have a National Insurance Number)
- The start date of the contractor’s assignments
- The end date of the contractor’s assignments (if known)
The start and end date – our interpretation
It is our understanding that HMRC is interested in identifying the period during which you have not been reporting the contractor’s payments via Real Time Information (RTI). Therefore, any work for which you deducted income tax should not be accounted for when calculating the start and end dates.
Example one: If you initially paid the contractor through your own payroll, but they later joined an Umbrella company, the ‘start date’ would be the date they first went out to work for the Umbrella.
Example two: If the contractor worked with Umbrella A and then switched to Umbrella B, the ‘start date’ would be the date they first went out to work for Umbrella A.
If the contractor worked on more than one assignment with the same client during the reporting period, you must combine all of these assignments into one record.
If the contractor worked on more than one assignment with more than one client during the reporting period, you can either combine all of these assignments into one record or list each client’s assignments separately.
If you do combine assignment records, their start date would be the first date of their first Umbrella assignment and the end date would be the last date of their last Umbrella assignment.
The reason you did not deduct income tax
You’re asked to confirm the reason why you did not operate PAYE on the payments. You should do this by selecting ‘F’ from HMRC’s list of reasons. This tells HMRC that another party (the Umbrella Company) operated PAYE on the worker’s payments, however you must remember to keep records demonstrating that this was the case.
The list of reasons
For your reference, the full list of reasons is below. If more than one option applies to a worker, HMRC’s guidance is to ‘select the one that best describes why PAYE wasn’t operated for the engagement’.
- ‘A’ is a self-employed contractor, like a sole trader
- ‘B’ is a self-employed contractor from a partnership
- ‘C’ is a self-employed contractor from a limited liability partnership
- ‘D’ is a worker from a limited company, including personal service companies
- ‘E’ is a non-UK engagement for a worker supplied from a company, partnership or person from outside the UK
- ‘F’ is another party operated Pay As You Earn (PAYE) on the worker’s payments
Hang on – what about the payment details?
There are some extra pieces of information that only need to be reported in certain circumstances. This includes the full name and address of the person or company you made each payment to and the total amount paid for each contractor during the tax quarter.
You do not need to include these details for Umbrella contractors.
For more information, refer to Regulation 84G in The Income Tax (Pay As You Earn) (Amendment No. 2) Regulations 2015.