The draft legislation was finally released at the end of L Day and formalises the intentions set out by HMRC.
Whilst much of the commentary has focussed on tackling non-compliance in the umbrella company market, which I will cover later in this article, there are two other important documents that also need to be considered to create a three dimensional view of HMRC’s serious intentions to tackle tax avoidance and disguised remuneration schemes, regardless of the label that is put on the arrangement. It also marks additional changes that are likely to impact market operations for agencies, consultants and payroll software.
Our view is that the agencies and end clients will drive the requirements for provider compliance going forward as ultimately it is the agency, or end clients, that will hold the liabilities where shortfalls occur. Therefore, it will be essential that agencies fully understand the nuances of the legislation to make fully informed decisions.
We are seeing commentary suggesting everything announced was as expected, which is simply not the case and demonstrates a lack of detailed understanding of the new requirements.
We are also seeing claims that accreditations and payslip checks already align and protect agencies under the new legislation; in our opinion, this is not the case and once again shows a lack of detailed understanding of the nuances that will drive the change.
Professional Passport made the decision to wait for the draft legislation before finalising our new approach, and we are glad we did, as we can now deal with the facts and reality of what will be required. We do not believe that any offering available currently deals with these nuances. We will be covering this in detail in our roadshows and events and more on this will follow.
Our new solutions will be ready for roll out early September and we are confident they will deliver the next level of compliance, transparency and certainty aligned specifically to the new requirements.
These are not tweaks to existing processes but an entirely new approach, which is what is required to deal with the legislation changes.
Reviewing the options available to agencies moving forward, Umbrella would appear to still hold its place in the market, subject to agencies and end clients becoming comfortable with the risks that come with this. The legislation appears to close the door on agencies running their own umbrella companies unless their end clients become comfortable with the any shortfall liability sitting with them, many of which probably won’t.
It does open potential risks where end clients are not fully informed and a Disguised Remuneration Operator creates both an agency and provider offering, exposing an end client to any any resulting debts.
