Interesting part of yesterday's announcement regarding contractors, umbrella companies and agencies. This is the brief from HMRC today: "Umbrella Companies To tackle the significant levels of tax avoidance and fraud in the umbrella company market, the government will make recruitment agencies responsible for accounting for PAYE payments made to workers that are supplied via umbrella companies. Where there is no agency, this responsibility will fall to the end client business. This will take effect from 6 April 2026." Based on my experience, the worries of clients and the worries of HMRC are not aligned. Clients use Umbrella companies to de-risk their contractor recruitment in terms of IR35. But HMRC are of the opinion that Umbrella companies are a significant risk in terms of not making PAYE payments. If HMRC are shifting the risk back to the agency and the client, then does that not spell the end of the use of Umbrella companies and return to the common-sense approach of letting contractor's own companies' accountants do it themselves properly? I hope so. #IR35 #UmbrellaCompanies #HMRC #RecruitmentAgencies #Contractors #Budget
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Business Development Manager at New Red Planet ♦ Helping businesses find the right solution for their employment and payroll needs.
Gross Payment Model, the clear and present risk for contractors’ agencies and end-clients Gross Payment Model, a growing concern in the contractor and recruitment sectors. Understanding and mitigating this practice is crucial for end-users and recruiters due to potential tax avoidance implications. Stay informed! #umbrella #hmrc #compliance #taxavoidance #newredplanet #payroll Read more: https://lnkd.in/eSFZ6AgE
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SupplyIN2, ComplyIN2, ContractIN2, InvestIN2, SalesIN2- Business Consultancy - Valuations, Exit Strategy, Acquisitions advisor for intermediary payroll providers and recruitment businesses adam@supplyin2.co.uk
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Did the budget finally bring about some form of compliance in the Umbrella Industry? By making agencies liable for any unpaid PAYE/NICs this will massively increase the need to not just partner with compliant umbrella companies but also constantly monitor and confirm their compliance. From experience a lot of non-compliant umbrella companies enter the market via agencies due to either degligence or greed, with many hiding behind a “candidate driven market” to turn a blind eye. Now the liability sits with the agency will we finally see real due diligence checks and proper PSL’s? https://lnkd.in/e45tmGtX
Tackling non-compliance in the umbrella company market
gov.uk
Contract and Interim Business Consultant
2moMore of where HMRC is coming from, taken from their Policy Paper: "HMRC analysis shows that umbrella companies were used to engage at least 700,000 workers in 2022 to 2023. This analysis also shows that at least 275,000 of these workers, and likely significantly more, were engaged at some point in 2022 to 2023 by umbrella companies that failed to comply with their tax obligations. HMRC data shows that £500 million was lost to disguised remuneration tax avoidance schemes in 2022 to 2023, almost all of which was facilitated by umbrella companies. These schemes can leave taxpayers with substantial tax bills. Hundreds of millions more was lost to so called ‘mini umbrella company’ fraud and other fraudulent attacks by people abusing umbrella company structures. The government is committed to closing the tax gap and making the tax system fairer by ensuring temporary workers are protected from large, unexpected tax bills caused by unscrupulous behaviour from non-compliant umbrella companies."