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As from 6 April 2015, a reporting obligation applies to employment intermediaries, requiring them to make quarterly returns to HMRC in respect of the workers they use to supply services to their clients unless they operate PAYE in respect of those workers.

Reports are required by employment agencies and intermediaries such as personal service companies or managed service companies as well as any business which uses freelancers to supply services to its clients, even if only to supplement the services supplied by its own workforce. For more details see the TolleyGuidance note.

This example shows who has to make reports where there is a complex chain of subcontractors.


Shows-R-Us is an events management company. It often contracts with clients to provide temporary IT, catering, cleaning, security and general support services for events held by those clients. Although Show-R-Us does have a number of employees, the nature of the business is such that it often has to supply significant numbers of workers to deliver the various types of services the clients require.

A typical arrangement might be for Shows-R-Us to bring in a number of freelance individuals it regularly uses for some activities but to source others by contracting with specialist security or catering agencies. Show-R-Us does not know whether the security or catering staff agencies can supply all the necessary workers or whether those agencies in turn have to contract with another intermediary to supply the number of workers needed:

It is Shows-R-Us which has to make the quarterly report to HMRC in respect of all the workers supplied to the client under the above arrangement, as Shows-R-Us is the only party which has a contract with the client. Shows-R-Us needs to get information about the identity of the workers actually supplying services to the client from the security agency and the catering staff agency to enable it to make the report. In turn, the catering agency needs to obtain some of that information from the temp agency but the reporting obligation, and the penalty risk, falls on Shows-R-Us only. If Shows-R-Us does not intend to operate PAYE on the amounts it pays to the workers (in which case they do not be included in a return), it will need to have evidence to show that no one exercises, or has the right to exercise, supervision, direction or control over the manner in which the workers provide their services to the client.

Shows-R-Us does not need to include anything about any of its own employees, in respect of whom it has operated PAYE, even if those employees have been used alongside the workers featured in the flowchart above, to fulfil the same contract with the client.