Earlier this year, the Chancellor of the Exchequer confirmed in his Spring Budget that the government would be providing an update on its “Tackling non-compliance in the umbrella company market” consultation paper.
The consultation paper process began with a call for evidence back in 2022, and many industry leaders have expressed their frustrations at the lack of updates and progress. News of the update was therefore enthusiastically received as a sign that there would finally be some tangible movement toward addressing several significant compliance issues blighting the umbrella sector.
So, was it worth the wait?
What did the update on the umbrella consultation paper include?
As promised, the update was released on Wednesday, April 18th. However, the reaction across the industry could have been more positive, with many observers further frustrated.
The update read as follows:
Tackling Non-Compliance in the Umbrella Companies Market
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. Last summer, the government consulted on options to reduce tax non-compliance in the market and will publish a response to its consultation in due course.
To support workers and businesses that use umbrella companies, HMRC will publish new guidance later this year, 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.
What does the umbrella consultation paper update mean for Big Fish and its customers?
It is a further case of waiting and seeing for all of us.
The government has committed to releasing further guidance to support contractors and recruitment agencies later this summer, as well as an online pay-checking tool for contractors to check their pay and deductions for accuracy.
The government’s reference to statutory due diligence could have longer-term implications and consequences for recruitment agencies and their end clients; however, this remains a proposal for further consultation.
Big Fish is already committed to providing the highest possible levels of compliance. Our SafeRec and Professional Passport accreditations mean that we regularly audit our systems and processes for compliance and audit all of our payslips daily.
We are already well prepared for and would welcome all further initiatives to eradicate non-compliance from our industry.