PAYE65010 - employment maintenance: employment agencies: agency schemes - general

The operational problems involving agency schemes are caused by erratic employee working patterns. The main difficulties for the operation of PAYE and the Employment Maintenance procedures are

• Workers registering with several agencies simultaneously
• Large numbers of workers changing jobs, often in quick succession

Which interacts with

• Employers confusion about when to submit forms P45 and P46
• Poor compliance in supplying National Insurance numbers

NINOs

All employers are required to supply NINOs but agencies often fail to enter the taxpayer’s NINO on Employment Maintenance forms or enter a Temporary Number instead. This practice should be discouraged wherever possible and the employer's attention drawn to Helpbook E13 ‘Day to Day Payroll’ in the Employer Annual Pack.

Where the opportunity arises, you should explain the importance of using the correct NINO and the benefits of doing so

• Starter and leaver forms (P45(1), P45(3) and P46) will be processed quicker and lead to fewer enquiries, for example telephone calls and forms, being issued to the employer from the Processing Office
• The National Insurance payments can be allocated to the employee’s NIC account quicker. This is important if the employee wants to claim Jobseekers Allowance (JSA) or other State Benefits

Agency database cleansing

The COP computer contains a large number of live taxpayer records where the taxpayer has not had paid employment with an agency for some time and may not do so in the future. Unless the employee tells the agency that a P45 is needed, the agency considers the employee available for work and keeps the employee on ‘the books’. In these circumstances a P45 is not produced.

PAYE Regulations state that an agency ceases to employ the agency worker either

• At the end of the relationship between the agency and the agency worker

Or

• At the end of a period of three months during which the agency makes no relevant payments to the agency worker

Note: A P45 is not required each time the agency worker stops providing services to a client or agency.

If either of these circumstances arise the agency must provide a form P45(1) for each case showing

• The last day of the last assignment as the date of leaving
• Pay and tax figures up to and including the last payment

Note: If an agency is persistently neglecting its PAYE responsibilities, a report should be made to your Manager to consider referring the matter to your Employer Compliance Team.