This amendment contains replacement pages on how ‘personally providing services’ are assessed, along with replacement pages on ‘supervision, direction or control’, which support both agency legislation and new employment intermediaries’ travel expense provisions.

The guidance also offers a number of additional examples of how the rules will work in practice. It outlines how ‘personally providing services’ applies in situations that typically involve a tripartite relationship between a worker, an agency and a client, and where more than one intermediary is involved.

It makes clear that the legislation will apply if any worker personally provides their services, irrespective of whether a worker sends a substitute. The legislation applies in respect of the worker that actually provides their services and not to a worker who sends a substitute to provide services.

The rules can still apply when the contract between the client and the agency includes more than a worker personally providing their services, for example, a contract that includes the provision of goods and a worker’s services. It can also apply when the contract between the client and the agency does not specify which workers are to personally provide their services.

The guidance states that the existence in an arrangement of a right to supervise, direct or control a worker can affect both whether the agency legislation and whether the employment intermediaries’ travel expense provisions apply to workers engaged through certain employment intermediaries.

’It is up to the person who would be liable to operate PAYE for income tax and pay Class 1 NICs to HMRC to determine if the agency legislation applies, and  who must produce evidence to show the SDC test is not met.

There is no definition of the meaning of the SDC test in law. For the purposes of the agency and travel and subsistence legislation, the SDC test is a test in isolation – there might be many indicators that suggest the SDC test is met, none of the other employment status indicators, for example, financial risk, the right to personal service etc, are considered when applying the SDC test. It is either met or it is not.

This means that the agency legislation may apply to a group of workers who, applying all the employment status tests, would be self-employed if they were working directly for the client.

HMRC says in the guidance it is not prescriptive on what evidence HMRC or the courts would find persuasive in considering whether this test is met, and it will depend on individual arrangements.

HMRC does not consider signed waivers and generic statements that the manner in which the worker personally provides the services is not subject to (or to a right of) SDC as satisfactory evidence.

As a general rule HMRC considers that agency workers who personally provide services to work in industries where the manner in which they work is governed by regulations or some other statutory framework or standards, will be subject to the right of SDC, and it is likely that in practice, they will be subject to SDC

If HMRC considers that the evidence produced to show that the SDC test is not met is unsatisfactory, HMRC will recover PAYE income tax and Class 1 NICs due from the employment intermediary or appropriate person responsible.

HMRC says the Employment Status Manual will be amended to reflect these updates in due course.

The updated HMRC guidance on employment intermediaries and supervision, direction or control (SDC) is here