Tax administration and maintenance day

Today, as part of Tax Administration and Maintenance Day, HMRC has provided an update in regards to the challenges umbrella companies are facing with non-compliance. We've highlighted the update below along with our thoughts as we know this is an important topic for our sector. We will continue to update you as this matter progresses.

" At Giant, we welcome this latest update as a vital step in moving towards regulation in the marketplace." - Christopher Walsh 

Here is HMRC's statement from today (Thursday 18th March 2024) :

Tackling Non-Compliance in the Umbrella Companies Market

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 details 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.

Our view at Giant Group

We still don’t have any tangible information on exactly what the umbrella market regulation will look like, following today’s announcement from the government, but we expect this to be included in their planned guidance further into 2024.

What we can say now is that they’re looking at option 1 of 3 which is Mandating of Due Diligence as an answer to contingent workforce regulation over the other 2 options which were on the table – Debt Chain Transfer and the Employment Business being responsible for PAYE deductions.

At Giant, we welcome this latest update as a vital step in moving towards regulation in the marketplace.

This is not to be taken as just a supervisory update, it’s a ‘next step’ towards a wide-ranging overhaul of the sector. Many contractors, agencies, and hirers view this overhaul as vital to restoring trust in the contingent labour market. This ensures the sector is compliant with regulations and that there are adequate deterrents to stop bad actors from exploiting the supply chain further.