Employment intermediary conditions

HMRC imposed penalties on the taxpayer a recruitment agency because it had failed to submit employment intermediary returns. The taxpayer appealed.

The business was incorporated on the basis it would provide recruitment agency services but over time its nature changed to supply individuals to work for its clients. This resulted in it falling potentially within the rules for employment intermediaries.

At the First-tier Tribunal the taxpayer initially accepted it had been a specified employment intermediary (Income Tax (PAYE) Regulations 2003 reg 84E) for the relevant quarters. However it turned out that it did not satisfy the condition in reg 84E(b). This stipulates that at some point within a quarter there must be more than one individual who provides services to a client under a contract between the employment intermediary and one or more clients.

In this case given that the...