The government’s recent announcement addresses long-standing issues in the umbrella company sector, marking a notable development in regulatory efforts.
- Today, detailed plans have been revealed to combat non-compliance in the umbrella companies market as part of Tax Administration Day.
- Susan Ball of RSM UK highlights the significance of these new statutory due diligence requirements for umbrella and agency sectors.
- A previous consultation on tax non-compliance has seen some proposals discarded, raising questions about future implications.
- HMRC guidance from December 2023 remains a key resource for organisations navigating these changes until further details emerge.
The government’s recent announcement, as part of Tax Administration Day, reveals detailed plans aimed at tackling non-compliance within the umbrella companies market. This marks a significant regulatory advancement, with statutory due diligence requirements now confirmed by the government. Susan Ball, an employment tax partner at RSM UK, noted the importance of these measures for both the umbrella sector and the entities utilising their services.
The announcement follows a consultation launched last summer, which proposed strategies to curb tax non-compliance by introducing a statutory requirement for end-clients or recruitment agencies to perform due diligence on umbrella companies. However, some elements discussed during the consultation were not addressed in the recent announcement, such as the potential transfer of payroll tax debt from non-compliant companies to recruitment agencies or end-clients, and the imposition of PAYE and NIC obligations on agencies supplying workers employed by umbrella companies. These omissions leave certain concerns unresolved pending further information from the consultation.
Susan Ball expressed optimism regarding the government’s ongoing engagement with the recruitment industry and other stakeholders. This ongoing dialogue is crucial to understanding the possible effects of a new statutory due diligence regime on organisations that depend on umbrella companies. Meanwhile, Ball strongly recommends adhering to the existing HMRC guidance published in December 2023 titled ‘Tackling non-compliance in the umbrella company market’. This document outlines the current expectations for organisations and may hint at future regulatory trends.
The new statutory due diligence initiative marks a crucial step toward addressing non-compliance in the umbrella company market.
