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The definition of externally provided workers is based on the income tax rules for agency workers at Section 44 Income Tax (Earnings and Pensions) Act 2003 which require staffing providers to operate PAYE in relation to individual workers supplied to clients.
The externally provided worker rules also apply where the worker is an employee of the staff provider and HMRC originally defined the conditions that need to be satisfied:-
The good news is that the revised HMRC definition of an “externally provided worker” is being relaxed in respect to point 5 and 6 above. The revised definition simplify the rules defining an externally provided worker to allow for cases where additional parties are involved in providing workers; and, this means that your can now claim for externally provided workers where the chain goes beyond the initial contracted staff provider in that the claims will allow for staff provided indirectly through more than one party..
This change will have effect for expenditure incurred on or after 1 April 2012.
If you have externally provided workers (agency staff) that are involved in your R&D project this is welcome news as Myriad Associates believed that the current legislation was far to restictive.
Please do not hestiate to contact us if you have any questions relating to this post or any other matter relating to R&D Tax Credits. Our friendly team of technical consultants will be more than happy to answer any question that you have.