Frequently Asked Questions - employment agencies and businesses

Will Employment Agencies/Employment Businesses be required to deduct PAYE and NICs?

A. Not as a direct consequence of this legislation. However, client workers presently operating through MSCs may choose to seek work via your business in an individual capacity in which case you will need to decide whether the “Agency legislation” applies or not.

Could an Employment Business or Agency be an MSC provider?

A. Employment Businesses and Agencies are specifically excluded from the definition of an MSC provider by virtue of section 61B(4), to the extent that they do no more than an Employment Business/Agency would normally do in pursuit of its business of finding work seekers work.

If an Employment Agency/Business is considered to be an associate of an MSC Provider, what are the consequences?

A. Firstly, the fact that an Employment Agency/Business is an associate of a person promoting and facilitating the use of companies to provide the services of individuals, might mean that that person is considered to be involved with the company (in accordance with section 61B (2)) even though they are not themselves doing any of the things set out in section 61B(2).

Secondly, as an associate of the MSC Provider, the Employment Agency/Business would fall within the first rank of debt transfer parties, effective from August 2007.

Are service providers who provide accounting, bookkeeping and payroll services exempt from the MSC legislation?

A. No.

The first test is whether a person is carrying on a business of promoting or facilitating the use of companies to provide the services of individuals. If they carrying on such at business, they are an MSC provider and the tests at 61B(2) need to be considered – are they ‘involved’ with the company?

There is a specific exemption for those who are merely providing legal or accountancy services in a professional capacity.

What information can an Employment Agency provide to workers without running the risk of having debts transferred to it?

A. We have produced a simple leaflet that can be distributed by Employment Agencies and any other interested parties to workers seeking more information. The leaflet refers the worker to this site which will be updated periodically. See also leaflet “what can I ask/tell a work seeker”.The leaflets are available on this site via the legislation and associated documents link

If an individual – who operates through a company - approaches an agency, what should an agency look for to see if this company is a PSC or MSC?

A. Other than under the terms of the Construction Industry Scheme (CIS), where gross and net payments are a factor, there is no requirement for employment agencies or businesses to determine the tax status of a limited company.