Whilst tax avoidance schemes and other examples of unethical practices and behaviours continue to be exposed, it's no wonder that HMRC perseveres with its examination and scrutiny of the umbrella sector.
The recently closed Umbrella Consultation Paper on tackling non-compliance in the umbrella company market was another important landmark for the industry and a clear indicator for future change.
However, not just umbrella companies will be affected by any subsequent changes resulting from the paper. Employment businesses and engagers will likely have to respond, too.
So, what does the umbrella consultation paper mean for employment businesses?
Tax avoidance schemes continue to blight the umbrella sector
It's necessary at this point to understand what the consultation paper was intended for.
According to the government, the paper had three main objectives:
- To deliver improved outcomes for workers (contractors).
- To support a level playing field in the umbrella company market.
- To protect taxpayers from the significant revenue losses that currently arise from non-compliance.
While points one and two are intangible, point three is obvious in its objective and will likely continue to be HMRC's primary focus.
The ever-growing number of tax avoidance scheme promoters listed by HMRC in its corporate report is a prime example of why this would be the case.
Umbrella consultation paper brings hope to employment businesses.
In our recent article on how Champion protects its agency partners, we reported how agencies are already at serious risk due to non-compliant umbrella businesses. However, the umbrella consultation paper should bring hope to concerned agencies.
Proposals around mandatory due diligence conducted by employment businesses or end clients, along with legislative changes around the transfer of tax debts to other businesses within the supply chain, should encourage agencies to be more responsible for the actions of suppliers within their supply chain.
Should such proposals be introduced, they may put more onus on agencies and give them more responsibilities for conducting due diligence. However, they should also significantly reduce the risk of exposure to non-compliant umbrella operators, making agencies a more attractive proposition to their clients and contractors.
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.
For further information, contact the Champion Contractors team on 0161 703 2549 or email info@championcontractors.co.uk.
Alternatively, visit our website at https://www.champion-contractors.co.uk/ or follow us on LinkedIn.