April 18th saw the government release its Tax Administration and Maintenance summary: Spring 2024 policy paper.
For the umbrella company sector, the release heralded the much-anticipated update on the “Tackling non-compliance in the umbrella company market” consultation paper, which closed in August 2023.
The consultation paper piqued the interest of many in the UK's temporary labour market, and anticipation has been building regarding actions and outcomes ever since. So, was it worth the wait?
Tackling Non-Compliance in the Umbrella Company Market: An Update
With the wait finally over, here is what the update said.
“The government remains concerned about the scale of non-compliance in the umbrella company market, and the detrimental impact that this has on workers, taxpayers and the labour market. Last summer, the government consulted on options to reduce tax non-compliance in the market and will publish a response to its consultation in due course.
To support workers and businesses that use umbrella companies, HMRC will publish new guidance later this year, including an online pay checking tool to help umbrella company workers to check whether the correct deductions are being made from their pay.
The government is minded to introduce a due diligence requirement to drive out bad actors from labour supply chains. To this end it will continue to engage with the recruitment industry and other key stakeholders on the detail of a statutory due diligence regime for businesses that use umbrella companies, and ensure it has the best understanding of the impacts that this could have on reducing non-compliance.”
Tackling Non-Compliance in the Umbrella Company Market: What Next?
The update's reference to statutory due diligence indicates that further actions will likely impact the whole supply chain and not just umbrella companies.
The original consultation paper referenced employment businesses undertaking due diligence but identified that such activities needed to be more consistent and universal. It also identified that entities further up the labour supply chain, such as end client companies, often do not have a full view of the entities that make up their labour supply chains.
One resulting option was a statutory requirement to undertake due diligence that could sit with either the end client or employment business and with a potential penalty for failure to do so.
However, for the moment, it's a further case of waiting and seeing.
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.
Alternatively follow us on LinkedIn.