Crawford Temple, CEO of Professional Passport, the UK’s largest independent assessor of payment intermediary compliance is calling for a working group to be established to help steer government policy on the future of umbrella working.
The call comes a year after the Government’s issued a consultation into the challenges that the umbrella sector is facing closed. On February 21st 2023, a BEIS Committee discussion in the House of Commons took place where Mark Jenkinson, MP for Workington reiterated that IR35 has created a business of tax avoidance by certain umbrella operators and the response by the Treasury consultation suggests that regulation might be required to stop a race to the bottom.
His comments were addressed by Kevin Hollinrake, MP for Thurston and Malton and Parliamentary Under-Secretary of State for Enterprise, Markets and Small Business who responded by saying he "had a meeting on this yesterday with my counterpart in the Treasury. We are both keen to move this forward very quickly. You will be hearing an announcement very shortly in terms of what we intend to do. You will hear the outcome in terms of the evidence base we have so far. We will be making our response to that clear very shortly afterwards.... ...we are keen to make sure we have more control over what some of these organisations are doing."
Professional Passport has long argued that in an unregulated industry, the umbrella sector harbours models that are causing harm to people’s pockets. These models purport to be genuine umbrellas but are tax avoidance and disguised remuneration schemes that are duping workers into signing up for them with the promise of more take-home pay.
The Government needs to tackle the dodgy schemes that are capitalising on people’s financial hardship as a matter of urgency. Enforcement is key. By targeting the architects of these schemes, the Treasury would see a fair return on the investment and save the country millions of pounds. It makes perfect economic sense.
It is vital that the industry as a whole can work collegiately and collaboratively with policymakers to find a way forward for the good of the sector and drive-up standards and drive out non-compliance.
A working group of experts in the umbrella market would be able to inform and assist Government in developing the right policy that addresses non-compliance, action and visible enforcement. Working together is the only way forward to raise standards and stamp out malpractice.