The measure

Anti-avoidance measures will be introduced to prevent arrangements under which employers use intermediaries to avoid paying PAYE or National Insurance Contributions (NIC) in respect of the people who work for them. Special rules for agencies, managed service companies and IR35 already place PAYE/NIC obligations on intermediaries, and the Government is proposing to strengthen this legislation to prevent what they call 'false self-employment'. The detail concerning this measure has yet to be announced. HMRC intend to publish a consultation and draft legislation on 10 December 2013.

Who will be affected?

Employers who are using an arrangement under which they engage self-employed workers via intermediaries and neither they nor their agency/intermediary is accounting for PAYE and NIC could be affected. However, until the detail of the measure is released, there is uncertainty around the type of arrangements which will be caught. Most likely, the measure will be designed to counteract avoidance where individuals would be considered employees but for the arrangements with the intermediary.


Changes to legislation will take effect from April 2014, following consultation.

Our view

The Government is expecting to raise approximately £400m per annum from this measure, so it seems that despite the existing array of anti-avoidance legislation designed to ensure the correct payment of PAYE and NIC, HMRC believe there to be still significant levels of avoidance. Employers should evaluate their own position once the detail has been released after 10 December 2013.

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