Why insist on a limited company?
As an interim service provider you should insist that candidates operate under the banner of a limited company.
There are very sound reasons for this:
- To avoid employment agency legislation including possible PAYE complications
- HMRC can clearly see they are not a member of your staff and so you avoid the associated legal burden of this (minimum wage, redundancy, SSP, maternity leave etc)
- HMRC can clearly see they are not a member of your staff and so you will not be liable for any hidden employment costs (pensions, holiday pay and other long-term overheads)
- You have no responsibility to operate PAYE on their fees. This is extremely important, since if they are a sole trader, the Inspector of Taxes could dispute their status and, in certain circumstances, look to you for income tax and National Insurance on their fees, long after the assignment is finished
- Being employed by their own company is indisputable proof that they are not employed by you