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.
In Summer 2023, the government consulted on options to reduce tax non-compliance in the market and will publish a response to its consultation soon.
To support workers and businesses that use umbrella companies, HMRC will publish new guidance later during 2024 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.
A large number of named tax avoidance schemes promoting construction of pay to minimise tax liabilities are provisions via umbrellas. Many workers and employees can find themselves exploited with potential underpayments of tax and National Insurance resulting in recovery activity. Whilst there are compliant umbrella organisation, some have operated in ways which are considered to not work.
PAYadvice.UK 19/4/2024