In the evolving and dynamic landscape of employment and payroll management, compliance is rapidly becoming the bedrock upon which the temporary labour and umbrella payroll industries must build their future.
Following the government's update on its “Tackling non-compliance in the umbrella company market” consultation paper, much has been written about the lack of progress and positive actions to address tax avoidance and unethical practices.
However, a clear path is emerging for how the government plans to approach regulation and control.
Legislation is evolving to tackle tax avoidance and non-compliance in the umbrella company sector
UK Legislation has been evolving and tightening over several years now, and compliance can no longer be treated as just a tickbox exercise.
The UK government has produced a catalogue of papers and guidance notes, all aimed at giving advice and support to workers, recruitment agencies, umbrella companies and hiring companies on how to remain compliant.
A recent update, “Warning for employment agencies using umbrella companies (Spotlight 64),” warns that “HMRC is aware of some umbrella companies who use employment and recruitment agencies to promote their tax avoidance schemes.” It adds, “Agencies need to avoid recommending such schemes. They must also carry out due diligence to make sure they are not using non-compliant umbrella companies.”
The guidance highlights the potential risks to recruitment agencies, saying, “You could also face financial damage due to penalties and tax liabilities.” It also highlights the government's consideration of penalties for agencies failing to carry out mandatory due diligence.
Considering this government guidance, it's fairly clear that compliance will be a significant responsibility of recruitment businesses in the future.
The benefits of compliance for recruitment agencies
Firstly, compliance mitigates risk, avoiding hefty fines, reputational damage, and even legal proceedings. By staying abreast of regulatory changes and ensuring full compliance, recruitment agencies can shield themselves and their clients from unnecessary risks.
Secondly, compliance breeds trust. In an era marked by increasing scrutiny of business practices, clients seek assurance that their supply chain operates compliantly. Adhering to regulations protects clients from potential legal ramifications and fosters long-term relationships built on trust and reliability.
Furthermore, compliance fosters a level playing field. By operating under the same regulatory framework, companies compete based on the quality of their services rather than skirting legal requirements to gain an unfair advantage.
At Champion Contractors, we're already wholly committed to compliance. Our SafeRec umbrella company certification and FCSA accreditations provide the protection and security agencies and their end clients need from an umbrella provider.
Find out more by contacting the Champion Contractors team on 0161 703 2549 or email info@championcontractors.co.uk.
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