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Umbrella companies - another case of HMRC examination?

freelancesupermarket.com newsroom

RSS 27 August 2009
HMRC's compliance activity team has identified a number of concerns regarding the use of overarching employment contracts by umbrella companies and agencies. We've asked Crystal Umbrella to give us their view.

There have been calls for HMRC to take a tougher stance on travel and subsistence schemes for contractors, in a move that would surely 'iron out the creases' within the industry, and rid us of those incompliant operators who are bringing the temporary workplace arena into disrepute.

As we have seen in the recent HMRC guidance for companies employing temporary workers, HMRC appear to be taking further steps to lay a hand down on a proportion of the industry that is operating illegally by offering guidance on tax, NI and minimum wage legislation. This soft approach is felt to only be the start in their major crackdown on the interim employment industry.

It is believed by HMRC that there are still many organisations, and in particular freelance recruiters, who operate illegally and fail to comply with legislation, whilst exploiting workers. Action will no doubt be taken against anyone found in breach of this.

Granted, there may be some businesses out there that are unaware that they are operating illegally, and only have their lack of keeping up to speed with this constant changing industry to blame. However, this is a feeble excuse and even if this is the case, they should be more aware of the recent changes and ensure their compliance.

It is felt, as Crystal Umbrella's Sales and Marketing Director Scott Illingworth notes, that "HMRC must take a strong stance against those who are illegally operating and bringing the industry into disrepute, tarnishing perfectly legitimate and fully compliant operators with the wrong brush."

Of course, for many Umbrellas such as Crystal Umbrella, these recent HMRC movements will not cause them any need for concern, having operated compliantly as a leading umbrella since their inauguration in 2001, and bolstered by their status as founding members of the Association of Employment Management companies (AMEC).

"We would welcome further and a more bullish inspection from HMRC of the industry and those operating within it, to finally clean up the image that has been heavily under scrutiny since the introduction of several pieces of legislation over the past few years", Illingworth goes on to explain.

It is also apparent that those who are abusing the system and not operating on a 'level playing field' that it should be are clearly giving themselves an unfair advantage, and with HMRC hot on their heels, they shouldn't expect to be getting away with it for much longer.

For further information on this article or Crystal Umbrella, please contact the New Business Team via newbusiness@crystalumbrella.com or 0800 848 8104

© 2009 All rights reserved. Reproduction in whole or in part without permission is prohibited.
Image: Day 174 by Okko Pyykko

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