KID me or KID me not

In 2020 the Department of Business Enterprise and Industry Skills (BEIS) introduced legislation which requires every employment business (‘agency’) to produce information on pay to those candidates that it intends to supply. This is a step that should be taken before the agency enters into any contract with the candidate.

Since the launch of the legislation, it is understood that compliance with the requirement has not been good, and BEIS has recently upgraded its capacity to look into this and complaints that arise. However, providing a Key Information document (KID) is an important step for agencies to take in order to help protect themselves against tax risk wherever an umbrella payroll provider (‘provider’) is involved. In providing information which shows that the individual will be paid on a PAYE basis only, the agency could help demonstrate that the agency is not encouraging the use of companies. This is relevant to liability under the Managed Service Company (MSC) rules, so that an unsuspecting agency is less likely to be investigated in the event of some tax infringement, that later arises due to the use by the candidate of a company. The converse also applies. Confirmation in a KID that the candidate will be paid by way of dividend should alert the agency to potential tax infringements, thus destroying the defence of ignorance. Failure to provide a KID at all, or providing one that is overtly false, is an offence under the regulations and can only serve to weaken the agency’s position should an investigation take place.

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