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The government consultation ‘Tackling non-compliance in the umbrella company market’ has been met with some concerns.

The Association of Professional Staffing Companies (APSCo) warns that the proposals are flawed as they do not address the root cause of the issue – the need for licencing of the umbrella sector.

Tania Bowers, Global Public Policy Director at APSCo, commented, “We have proposed a broader definition to encompass umbrella companies within existing legislation which also allows for marketplace evolution, such as direct engagement with end-hirers.

“While we welcome the commitment to tackle non-compliance in the umbrella sector, we think the proposals do not go far enough to target the umbrella companies, as opposed to placing more liability and obligations on recruiters.

“There are no barriers to entry to the umbrella market, which means that setting up a corporate entity and launching an umbrella company can be done in a matter of days. A licencing or registration process is required with EAS or another body, in recognition that financial wrongdoing is the largest risk to workers and the supply chain. Further, industry self-regulation should be replaced with statutory compliance codes.”

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Tania added, “Members support enshrining due diligence in regulation as a first step as this will immediately lead to a more level playing field but don’t think it’s the most effective route to stop tax non-compliance.

“As to debt transfer and requiring recruiters to take on deemed employer obligations, members consider this will lead to SMEs being edged further out of the marketplace as end-hirers and outsourcers understandably toughen up their preferred supplier lists and contractual indemnities and potentially take the hiring in-house.

“APSCo will continue to work with HMT, EAS and HMRC to find the right solutions to tackle tax non-compliance in the umbrella sector and ensure the voice of our members is heard, but urge Government to redirect their energy at regulating the sector itself, rather than requiring recruiters to do so.”

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