The chancellor’s pledge in his autumn statement to clamp down on the rising use of employment intermediaries may have caused a few frissons of anxiety amongst independent professionals contracting through Umbrella Companies; however, compliance advisory and risk management agency Professional Passport believes that these professionals will have nothing to fear.
Readers of these pages may remember that in May this year Professional Passport declined to approve providers that used LLPs or a self-employment model fronted by a limited company intermediary on the grounds that such models were being adopted as tax avoidance vehicles and were at high risk of non-compliance with Inland Revenue requirements. In the worst cases, enforcement of managed service company legislation could put recruiters at risk of being liable for unpaid taxes for workers engaged through this model.
The company recently gave evidence to the new House of Lords select committee on PSCs highlighting the major threat to compliance posed by these arrangements. Its MD, Crawford Temple, expressed his approval of HMRC’s recognition of the threat and its swift action to begin closing down these models.
Professional Passport will continue to lead the drive for compliance across the sector, Mr Temple said, adding that well-run Umbrella Services operating in alignment with Professional Passport’s operational standards will not be affected by the new avoidance clampdown. PSCs supported by accountancy service providers will also have nothing to fear and, since construction industry schemes (CIS) already have a defined structure in place, Professional Passport believes they will also be safely outside the initiative.