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Use of contractors within RCDTS Ltd
Source: WhatDoTheyKnow
Authority: HM Revenue and Customs
Status: The request was
partially successful
.
Imported path: /opt/loancharge/imports/wdtk/requests/use_of_contractors_within_rcdts
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Imported text
SOURCE: WhatDoTheyKnow
SOURCE_URL: https://www.whatdotheyknow.com/request/use_of_contractors_within_rcdts
TITLE: Use of contractors within RCDTS Ltd
AUTHORITY: HM Revenue and Customs
AUTHORITY_URL: https://www.whatdotheyknow.com/body/hmrc
STATUS: The request was
partially successful
.
REQUEST_SLUG: use_of_contractors_within_rcdts
CAPTURED_AT: 2026-05-19T07:21:18+00:00
PROVENANCE: {"first_seen_at": "2026-05-18T12:59:27", "first_seen_page": "2", "first_query_term": "\"disguised remuneration\"", "first_date_after": "2020/01/01", "first_date_before": "2021/01/01", "matched_query_terms": "\"Part 7a\" | \"S684\" | \"disguised remuneration\"", "matched_date_ranges": "2001/01/01 to 2027/01/01 | 2020/01/01 to 2021/01/01", "first_search_url_template": "https://www.whatdotheyknow.com/search/%22disguised%20remuneration%22/requests?commit=Filter&query=%22disguised+remuneration%22&request_date_after=2020%2F01%2F01&request_date_before=2021%2F01%2F01&request_variety%5B%5D=sent&request_variety%5B%5D=response&request_variety%5B%5D=comment&sortby=&utf8=%E2%9C%93&page="}
ATTACHMENTS:
- FOI2020_01613.pdf | https://www.whatdotheyknow.com/request/use_of_contractors_within_rcdts/response/1651271/attach/3/FOI2020%2001613.pdf?cookie_passthrough=1 | application/pdf | 229529 bytes
- [not downloaded] | https://www.whatdotheyknow.com/request/use_of_contractors_within_rcdts/response/1651271/attach/html/3/FOI2020%2001613.pdf.html | | 0 bytes
- IR2020_03081.pdf | https://www.whatdotheyknow.com/request/use_of_contractors_within_rcdts/response/1696080/attach/3/IR2020%2003081.pdf?cookie_passthrough=1 | application/pdf | 216916 bytes
- [not downloaded] | https://www.whatdotheyknow.com/request/use_of_contractors_within_rcdts/response/1696080/attach/html/3/IR2020%2003081.pdf.html | | 0 bytes
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MESSAGE 1 [outgoing]
HEADER: edward martin
7 September 2020
Delivered
--------------------------------------------------------------------------------
Dear HM Revenue and Customs,
Regarding the HMRC wholly owned enterprise RCDTS Ltd
1. How many contractors has the business employed since incorporation
2. What is the average tenure of each contractor
3. How many of these contractors have been paid via umbrella providers
4. How many have been remunerated via contractor loan schemes
5. At what date was this identified by the accounting office, Jon Thompson, or his deputy James Hara, and what action was taken
Yours faithfully,
edward martin
================================================================================
MESSAGE 2 [incoming]
HEADER: foi.team@hmrc.gsi.gov.uk on behalf of FOI Central Team,
HM Revenue and Customs
8 September 2020
--------------------------------------------------------------------------------
Our ref: FOI2020/01613
Dear Mr Martin,
Freedom of Information Act 2000 Acknowledgement
Thank you for your communication of 7th September which has been passed to
HMRC's Freedom of Information Team.
We have allocated the above reference which you should quote if you need
to contact us.
The Team will arrange for a reply to be sent to you which will either
comply with HMRC's obligations under Freedom of Information Act or, if we
think it's an enquiry that we don't need to address under the terms of the
Act, let you know why. If it is the latter we will, if possible, pass it
on to a more appropriate part of the Department for answer.
As you will appreciate, the coronavirus pandemic has provided
unprecedented challenges for Government Departments including HMRC. Over
the coming weeks our priorities are to provide critical existing and new
Public Services for Government to support customers during this difficult
time. As a result, resources may be diverted away from usual compliance or
information rights work. HMRC aims to respond to all FOIA Requests within
20 working days. If for whatever reason this timescale cannot be complied
with HMRC will, where possible, write to you explaining the reason for the
delay and providing an estimated time for response.
Yours sincerely
HMRC Freedom of Information Act Team
================================================================================
MESSAGE 3 [incoming]
HEADER: no-reply@hmrc.ecase.gsi.gov.uk on behalf of FOI Team,
HM Revenue and Customs
5 October 2020
--------------------------------------------------------------------------------
1 Attachment
FOI2020 01613.pdf
224K
View
Download
Dear Mr Martin,
We are writing in response to your request for information, received 7
September.
Yours sincerely,
HMRC Freedom of Information Team
================================================================================
MESSAGE 4 [incoming]
HEADER: no-reply@hmrc.ecase.gsi.gov.uk on behalf of FOI Team,
HM Revenue and Customs
2 December 2020
--------------------------------------------------------------------------------
Our ref: IR2020/03081
Dear Mr Martin,
Freedom of Information Act 2000 Acknowledgement
Thank you for your communication of which has been passed to HMRC's
Freedom of Information Team.
We have allocated the above reference which you should quote if you need
to contact us.
The Team will arrange for a reply to be sent to you which will either
comply with HMRC's obligations under Freedom of Information Act or, if we
think it's an enquiry that we don't need to address under the terms of the
Act, let you know why. If it is the latter we will, if possible, pass it
on to a more appropriate part of the Department for answer.
As you will appreciate, the coronavirus pandemic has provided
unprecedented challenges for Government Departments including HMRC. Over
the coming weeks our priorities are to provide critical existing and new
Public Services for Government to support customers during this difficult
time. As a result, resources may be diverted away from usual compliance or
information rights work. HMRC aims to respond to all FOIA Requests within
20 working days. If for whatever reason this timescale cannot be complied
with HMRC will, where possible, write to you explaining the reason for the
delay and providing an estimated time for response.
Yours sincerely
HMRC Freedom of Information Act Team
================================================================================
MESSAGE 5 [incoming]
HEADER: no-reply@hmrc.ecase.gsi.gov.uk on behalf of FOI Team,
HM Revenue and Customs
22 December 2020
--------------------------------------------------------------------------------
1 Attachment
IR2020 03081.pdf
211K
View
Download
Dear Mr Martin,
We are writing in response to your request for information, received 27
November.
Yours sincerely,
HMRC Freedom of Information Team
================================================================================
ATTACHMENT TEXT EXTRACTION / OCR
================================================================================
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ATTACHMENT: FOI2020_01613.pdf
TEXT_FILE: FOI2020_01613.pdf.txt
METHOD: pdf_native
OCR_USED: False
PAGES: 3
--------------------------------------------------------------------------------
--- PDF page 1 ---
Information is available in large print, audio and Braille formats.
Text Relay service prefix number – 18001
Freedom of Information Team
S1715
6 Floor
Central Mail Unit
Newcastle Upon Tyne
NE98 1ZZ
Mr Edward Martin
By email: request-690047-
27cfb032@whatdotheyknow.com
Email
foi.request@hmrc.gov.uk
Web
www.gov.uk
Date: 5 October 2020
Our ref:
FOI2020/01613
Dear Mr Martin
Freedom of Information Act 2000 (FOIA)
Thank you for your request, which was received on 7 September, for the following
information:
“Regarding the HMRC wholly owned enterprise RCDTS Ltd
1. How many contractors has the business employed since incorporation
2. What is the average tenure of each contractor
3. How many of these contractors have been paid via umbrella providers
4. How many have been remunerated via contractor loan schemes
5. At what date was this identified by the accounting office, Jon Thompson, or his deputy
James Hara, and what action was taken”
RCDTS Ltd was incorporated on 9 July 2015 and became operational on 1 December 2015.
The company was set up and is wholly controlled by HMRC. It is a not for profit company
limited by guarantee.
The company’s delivery focus has been on the efficient delivery of managed information
technology (IT) services for HMRC. RCDTS Ltd personnel work with the Chief Digital and
Information Officer (CDIO) group and provide a managed service to HMRC including
supporting the wider transformation of HMRC’s IT. This work is flexed according to the
needs of HMRC.
The majority of RCDTS’ contracts are contractors brought in via fully contracted out
professional service provision. In these circumstances, the arrangement is between RCDTS
and the supplier. The contractors then have their own arrangements with and are directly
managed by the supplier.
The remainder of contracts are for contingent labour via an agency, and we use the Crown
Commercial Service’s framework contracts for this. These contractors form a flexible
complement to the workforce, sourced through an employment agency.
--- PDF page 2 ---
2
OFFICIAL
With contingent labour there is always at least one agency between HMRC/RCDTS and the
individual contractor, although in practice this contract can be further sub-contracted
meaning there are multiple agencies between the department and the contractor
themselves.
The people employed by RCDTS Ltd are not civil servants; however, they deliver technical
and digital services exclusively for HMRC. Details of both permanently employed staff and
contractors engaged are available in the company’s Annual Reports.
HMRC does not hold complete data for contractors brought in via fully contracted out
professional service provision for the time period requested. As the department has no
contractual relationship with these contractors, the remainder of your request has been
answered with reference to contingent labour only.
The number of contingent labour engagements since July 2015 is 233, of which 84 are
current at the time this request was received.
Where the end engagement date is not available due to the contractor being currently
engaged, we have used the recorded work order end date to calculate an average
engagement duration of 588 calendar days. The average duration of completed
engagements is 393 calendar days.
You have requested the number of contractors which have been paid through an umbrella
company. I can advise that umbrella companies are known to be used by off payroll workers
engaged by RCDTS via an intermediary and records show this to be the case for 110
engagements. In this scenario the contractors are required to use umbrella providers
approved by the Financial Conduct Authority. Umbrella companies are not always indicators
of tax avoidance.
Whilst I note that there is no statutory definition of an ‘umbrella company’, it is generally
accepted that an umbrella company is a company that employs temporary workers who
work at different end clients’ premises.
Umbrella companies do not source work. Typically the umbrella will enter into a contract with
a recruitment agency who will source work from end clients. The worker is an employee of
the umbrella company and there should be a contract of employment in place which defines
the working terms and conditions.
The end client will pay the recruitment company the agreed rate for carrying out the work.
The contract between the recruitment company and the umbrella will have defined the terms
of payment that apply for the work.
As detailed above, RCDTS would hold a contractual relationship with either the recruitment
agency or service provider rather than any umbrella company and are not involved in the
payment arrangements of individual contractors.
As RCDTS are not involved in the payment arrangements between their suppliers and
individual contractors RCDTS have not remunerated contractors through disguised
remuneration avoidance schemes.
However, in November 2018, responding to a letter from the House of Lords Economic
Affairs Committee, it was acknowledged that as HMRC are not privy to the arrangements
between suppliers and their contractors, it is possible that a contractor might have used a
disguised remuneration (DR) tax avoidance scheme without HMRC’s knowledge.
To inform the letter from HMRC to the House of Lords Economic Affairs Committee, analysis
of the contractor records held was completed. The analysis involved clashing the details of
individual contractors against the list of known users of DR schemes. The result of this
analysis would show whether a contractor had used a DR scheme.
--- PDF page 3 ---
3
OFFICIAL
This work identified five contractors who had a history of using DR tax avoidance schemes
and had previously been engaged by HMRC. In all cases, the periods of scheme usage did
not run concurrently with the period for which they were engaged by HMRC. On this basis it
was determined that HMRC did not hold any records of a contractor being engaged whilst
using a DR scheme.
HMRC’s database of known avoidance scheme users is constantly updated and enriched.
Also, the database of contractors is dynamic as new contractors are constantly being
engaged and other contractors reach the end of their engagements. Between November
2019 and July 2020, the analysis was run a further two times alongside further compliance
activity.
This analysis indicated a number of existing contractors where it was possible they were
using a DR scheme. Compliance teams concluded that 13 contractors, five which were
providing services to RCDTS and eight providing services to HMRC were highly likely to be
current or previous users of a DR scheme.
HMRC/RCDTS acted promptly once it had been informed of the results of the cross-
referencing exercise, terminating the relevant engagements within two weeks of being
informed.
If you are not satisfied with this reply you may request a review within two months by
emailing foi.review@hmrc.gov.uk, or by writing to the address at the top right-hand side of
this letter.
If you are not content with the outcome of an internal review you can complain to the
Information Commissioner’s Office.
Yours sincerely,
HM Revenue and Customs
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ATTACHMENT: IR2020_03081.pdf
TEXT_FILE: IR2020_03081.pdf.txt
METHOD: pdf_native
OCR_USED: False
PAGES: 2
--------------------------------------------------------------------------------
--- PDF page 1 ---
Information is available in large print, audio and Braille formats.
Text Relay service prefix number – 18001
Freedom of Information Team
S1715
6 Floor
Central Mail Unit
Newcastle Upon Tyne
NE98 1ZZ
Mr Edward Martin
By email: request-690047-
27cfb032@whatdotheyknow.com
Email
foi.request@hmrc.gov.uk
Web
www.gov.uk
Date: 22 December 2020
Our ref:
IR2020/03081
Dear Mr Martin
Freedom of Information Act 2000 (FOIA)
Thank you for your email of 27 November, which seeks a review of our original response to
your information request. Your email made a number of representations on this matter which
I will address in this letter.
In your original request you said:
There is a prima facie case that HMRC made a payment within Part 7A ITEPA 2003 under
arrangements in which PAYE was not operated. It must be in the public interest for an
explanation to be provided when HMRC apparently chooses who should be liable for that
PAYE but concludes that "there could be no question of HMRC or RCDTS Ltd being subject
to a Regulation 80 determination'”
HMRC’s initial response explained that HMRC does not have a direct contractual
relationship with contractors and are not involved in the payment arrangements between
suppliers and individual contractors.
There is always at least one UK-based agency between HMRC and the contractor supplied
to provide contingent labour, although in practice this contract can be further sub-contracted,
meaning there are multiple agencies between the department and the worker themselves.
Part 7A ITEPA 2003 places a requirement to operate PAYE on an employer where a third
party takes a relevant step in favour of their employee. Since HMRC is not the employer of
the workers involved, HMRC cannot be required to account for amounts of any PAYE under
Part 7A if the worker and their employer use arrangements involving third parties who take
relevant steps.
On this basis HMRC cannot have ‘made a payment within Part 7A ITEPA 2003’, which
would require us to account for an amount of PAYE.
--- PDF page 2 ---
2
OFFICIAL
In requesting an internal review of your response, you have provided an extract of the PAYE
Manual at PAYE81510 as evidence that HMRC is liable to operate PAYE on its contingent
labour:
‘Section 689 enables HMRC to require someone who is not the employer of an employee,
but for whom the employee works, to account for PAYE on that employee’s earnings.’
I can advise that your interpretation of this manual would be correct in the circumstance that
an end user had been directly supplied with a worker by an offshore employer. However, as
has already been provided, HMRC’s contingent workers are supplied via a UK based
intermediary. You can find more information on the application of section 689 in the
Employment Income Manual at EIM11820 and the Employment Status Manual at ESM2039.
On this basis there could be no question of HMRC or RCDTS Ltd being subject to a
Regulation 80 determination or a decision to dis-apply PAYE under S684(7A) ITEPA 2003.
Any considerations in respect of determinations under regulation 80 Income Tax (PAYE)
Regulations 2003 or the exercise of any discretion under section 684(7A) ITEPA 2003 would
be in respect of any third party who may have obligations under the PAYE regulations.
Therefore, the party liable to operate PAYE would depend on the individual circumstances of
each case and as such we cannot provide an answer to the part of question 2 in your
original request, which asks “which party in the contractual chain did the person reaching
that decision believe was liable for PAYE?”
This conclusion was reached by a technical adviser in HMRC’s Individuals Policy Directorate
at the time of your initial request, based on the statutory provisions you referred to.
Having carefully considered the initial response to your request along with the
representations provided, I find the information previously provided to you to
be accurate.
If you are not content with the outcome of this internal review you can complain to the
Information Commissioner’s Office.
Yours sincerely,
HM Revenue and Customs