Agency Workers - some danger areas
November 2005
What is an agency worker?
If you supply labour only to your clients, your relationship with your subcontractor is likely to be that of employer and employee. You may need to stop tax and national insurance from their pay.
For instance if you are a contractor and your client asks you to build a house, then any subcontract labour that you use can be dealt with under the construction industry rules as long as the workers present a correct CIS4 certificate.
However, if your client decides to build the house himself and asks you to supply a plumber (rather than merely introduce him), then you would be considered an agent, and the plumber your agency worker. Even if the tradesman had a valid CIS4 certificate you would still need to stop tax and national insurance on the wages paid to him for that labour only contract.
Of course this sort of situation is not restricted to the construction industry but to most business contracts where a supply is made on a labour only basis.
The rules apply if your subcontractor is a sole trader or a partnership. The rules DO NOT apply if your subcontractor is a limited company.
If you trade on a labour only basis and use subcontract labour to do the work, then potentially the Agency Worker tax rules may apply. Please call if you would like us to review your contracts to ensure that you are keeping the right side of the legislation.
