Employment Intermediaries and Reporting

Introduction

If you run an employment agency or act as an intermediary placing workers with clients, you may have reporting obligations to HMRC — even if you don't operate PAYE on those workers' payments. Understanding when and how to report is essential to avoid penalties and remain compliant with payroll regulations.

What is an employment intermediary?

An employment intermediary (also known as an agency) is any person or business that makes arrangements for an individual to work for a third party, or arranges payment for work done for a third party. This covers a wide range of scenarios, from recruitment agencies placing temporary staff to more complex supply chain arrangements involving multiple parties.

The key characteristic is that you're acting as a go-between — connecting workers with the businesses that use their services, rather than directly employing those workers yourself.

When you must report to HMRC

You must report details to HMRC if you place workers with clients and you do not operate PAYE (Pay As You Earn) on the payments made to those workers.

This reporting requirement applies when you are the intermediary that holds the contract with the client (the person or business that uses the worker's services). If there are multiple intermediaries in the supply chain, the one with the direct contractual relationship with the end client is responsible for reporting.

When you don't need to report

You are exempt from these reporting requirements if all of the following statements are true:

• You are a UK employer
• You supply workers to provide their services to end clients and nobody else is involved in the arrangement
• You operate PAYE when you pay those workers

In other words, if you're running payroll properly for the workers you supply, and there are no other parties in the chain, you don't need to submit these additional reports.

What information you must report

You must provide details of all workers you place with clients where PAYE is not operated on their payments. HMRC provides a specific report template that sets out exactly what information is required.

The template is available in multiple formats (CSV and ODS) and works with common spreadsheet software including Excel, LibreOffice, and OpenOffice. If you use an Apple Mac with Numbers, you'll need to use the CSV version of the template.

The template includes guidance in the column and row headings to help you understand what data is needed for each field.

How often you must report

Reports must be sent to HMRC at least once every 3 months. However, you have flexibility in choosing your reporting frequency. You can decide to submit reports more often if it suits your business operations — for example, weekly, monthly, or once per reporting period.

This allows you to align your reporting with your existing business processes, rather than being forced into a specific schedule that may not fit your workflow.

How to submit your reports

HMRC operates a dedicated online service for employment intermediaries to upload and send their reports. The process involves two steps:

1. Create your report using HMRC's official report template, filling in the required information about the workers you've placed

2. Upload and send your completed report through HMRC's employment intermediaries online service

You cannot submit these reports by post or email — you must use the online service to ensure your compliance obligations are met.

Who is responsible for reporting

The employment intermediary that holds the contract with the client (the end user of the worker's services) is responsible for sending the reports to HMRC.

This is important in situations where multiple intermediaries are involved in the supply chain. Even if there are several agencies or middlemen between the worker and the end client, only the intermediary with the direct contractual relationship with the client needs to submit the reports.

Reducing the regulatory burden

HMRC has consulted with intermediary representatives when developing these reporting requirements. The department has made changes to the final requirements where possible to reduce the administrative burden on businesses, while still maintaining the information needed for tax compliance purposes.

This means the reporting framework has been designed with input from agencies and intermediaries themselves, attempting to balance HMRC's need for information with the practical realities of running an intermediary business.

Staying compliant

To ensure you meet your obligations:

• Determine whether you fall under the reporting requirements or qualify for an exemption
• Download and familiarise yourself with HMRC's report template
• Establish a reporting schedule that meets the minimum quarterly requirement
• Set up access to HMRC's employment intermediaries online service
• Keep accurate records of all workers you place and the clients they work for
• Submit your reports on time to avoid potential penalties

If you're uncertain whether your business arrangements trigger these reporting requirements, it's worth seeking professional advice. The rules around employment status and intermediary relationships can be complex, particularly when multiple parties are involved.

Sources

• Employment intermediaries: report template
• Employment intermediaries reporting requirements
• Upload and send employment intermediary reports

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.