It is legal, and is due to new legislation affecting almost everybody. Essentially, if you pay an individual you need to employ them directly is the basic premise. Obviously that wouldn't affect a company, even if a one person consultancy type company. Up until 2016 these guidelines were applied differently. However, the introduction of new off-payroll worker legislation means that payments to Limited Companies, Partnerships or Agencies are now also affected.

Almost any procuring body is now required to follow a procedure as below:

If you are engaging someone to provide services personally either directly or through a company, partnership or agency then please fill in the online status form giving as much information as possible. https://www.tax.service.gov.uk/check...-for-tax/setup

Some of the questions that may assist are:
• Is the service provider registered for VAT?
• Do they operate a business bank account?
• Do they have the expense of running an office?
• Do they advertise for work eg. do they have an internet site and do they in practice provide (substantial) services to other clients?

Whilst a ‘yes’ to any of the above questions alone could not determine a service provider’s status, the answers would help to form an overall picture that we can share with HMRC that may assist in obtaining a ruling.