Frustration over umbrella company regulation update

As promised in the recent Spring Budget, the government has provided an umbrella company regulation update – but it’s been met with some disappointment.

Published last week on Tax Administration and Maintenance day, it was expected to deliver more detail, but instead, it suggests further delays when it comes to finding a solution to tackling non-compliance in the umbrella sector.

It stated:

‘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.’

Commenting on the underwhelming announcement, Andy Chamberlain, IPSE’s policy director, said, “It’s great that government is minded to do something about non-compliance in the umbrella company sector.

“Contractors want to see a regulated umbrella sector, and we’re ready to work with government to chalk up how a due diligence requirement could work.

“But we need some urgency from government. It’s been almost a year since it began consulting on the proposals – ones that should have been in place before the off-payroll working rules. With an election on the horizon, the plans are in a precarious position and risk being delayed even further.”

To find out more about contracting please contact Jaime on 01206 591 000 or email jaime.thorpe@contractorumbrella.com.