Following the Autumn Statement 2013, the Onshore Intermediaries Legislation was introduced to combat the perceived problem of false self-employment created by employment intermediaries.
This is typically a payroll and contract company that sits between the end user and the worker, very much like an agency does in the typical contractual chain involving PSCs. There are distinct differences between an agency and an employment business however – the employment intermediary as well as providing payroll services to the end user, assumes the role of subcontractor to the main contractor, i.e. the employment intermediary accepts and removes the risk of employment status matters from the end user.
HMRC estimated that around 200,000 workers in the construction sector and another 50,000 workers in other sectors such as driving, catering, and security, were being ‘dressed up’ as self-employed, typically because of a bogus right of substitution.