Accountants for Recruitment Agencies

Where an agency supplies a worker who is personally subject to supervision, direction or control, the agency is generally treated as the employer for PAYE purposes unless another party in the chain correctly operates PAYE. Agencies that do not operate PAYE for workers they place must also submit quarterly employment intermediary reports.

From 6 April 2026, the government's umbrella company measures make the recruitment agency, or the end client where there is no agency, responsible for accounting for PAYE where workers are engaged through an umbrella company. Agencies need to know which umbrellas they use and how payments are calculated.

Where a contractor works through their own company, a medium or large end client makes the status determination. The fee-payer, often the agency, must deduct tax and National Insurance if the engagement is inside the rules. Status Determination Statements must be passed down the chain, and failing to do so can move liability to the agency.

When an agency supplies temporary staff, VAT is normally charged on the whole amount billed, including the worker's pay, not only the margin. Charities and VAT-exempt clients such as some healthcare and financial businesses cannot reclaim that VAT, which affects pricing.

Permanent placement fees are standard-rated for UK business clients. Fees for placing candidates with overseas clients may be outside the scope of UK VAT under the business-to-business rules.

Permanent fees commonly carry rebates if a candidate leaves within an agreed period. Where rebates are likely, income and provisions should reflect the commercial position. Contract terms matter more for agencies reporting under the revised FRS 102 revenue requirements for periods beginning on or after 1 January 2026.

Temporary workers are paid weekly or monthly while clients may pay on 30 to 60 day terms. Many agencies use invoice finance; the facility balances, fees and reserves need reconciling every month so the accounts match the lender's statements. Gross margin per placement and debtor days matter more than turnover.

A recruitment agency company files statutory accounts at Companies House, normally nine months after its accounting reference date, and a CT600 within 12 months of the end of its Corporation Tax accounting period. Most smaller companies pay Corporation Tax nine months and one day after the period ends; the main rate is 25%, with the 19% small profits rate up to £50,000 and marginal relief between £50,000 and £250,000.

VAT registration is required once taxable turnover passes £90,000 in a rolling 12 months, or is expected to within 30 days. Paying any salary, including to a director, brings PAYE and Real Time Information reporting, and employing eligible staff brings automatic-enrolment pension duties. The confirmation statement is a separate annual filing.

Thresholds, rates and deadlines reflect the 2026/27 UK position at the content update date. Check current GOV.UK guidance, or ask us, before relying on them for your own company.

We start with a free consultation to understand how you invoice, buy, pay people and get paid. You then receive a written scope and fee before chargeable work begins, covering bookkeeping, VAT, payroll, year-end accounts, CT600 and director Self Assessment as agreed.

Advisory work such as management accounts, cash-flow forecasting, pre-year-end planning or specialist reliefs is quoted separately rather than assumed to be included. Where a question needs specialist legal or tax advice outside our scope, we say so.