On Thursday 3 August, leading individuals from various organisations across the recruitment and umbrella sectors took part in a roundtable event hosted at JMW Solicitors LLP’s Manchester office jointly chaired by Paul Chamberlain (Partner, Head of Employment) and Simon Bloch (Partner).

The purpose of the discussion was to consider the content of the Government’s Consultation: Tackling non-compliance in the umbrella company market (the ‘Consultation’).

A lively debate took place which touched upon all areas of the Consultation and the attendees considered the proposals put forward by the Government.

Here are some of the discussion points:

• Producing an accurate definition of an umbrella company is not a straightforward task and the proposed definitions set out in the Consultation divided opinion. An alternative definition was discussed, to define an umbrella company by exclusion with certain types of organisations to be carved out from a broad and general definition.  
• The Government’s rationale for undertaking the Consultation was explored – in particular whether the Consultation was motivated by a desire to protect the individual worker or to protect the Government’s ability to recover tax.  
• Regarding enforcement, questions as to who would be best placed to enforce any proposed legislation saw concerns raised about the ability of EASI, HMRC and the GLAA (if considered to be a viable option) to adequately police any new rules.   
• Where non-compliance has been established, personal liability for individuals, for instance directors of non-compliant organisations, would give the proposed regulations more teeth and encourage compliance.  
• The importance that payroll software plays was acknowledged, and it was discussed whether any legislation should be extended to capture payroll software providers. However, concerns were raised that to include such providers under the remit of any proposed legislation would be an impractical step as the scope of who would be ‘caught’ by the legislation would be too wide.   
• A proposal put forward by the Government within the Consultation was to mandate due diligence, but what exactly ‘due diligence’ means in this context remains somewhat unclear.  
• Around the table there was appetite for requiring minimum information to be included on a worker’s payslip. This would include supply chain deductions being clearly stated in the hope of increasing transparency and understanding of pay for both workers and also HMRC.  
• There was considerable concern around the use of ‘kickback’ payments within the umbrella sector and a feeling that greater transparency and control is required in that regard.  
• The Conduct Regulations, to be effective in this space, requires wholesale amendments and merely bringing umbrella companies into scope of the Conduct Regulations as currently drafted would not work.
• There is a widespread failure to effectively use and review Key Information Documents (KIDs) throughout the sector which was of substantial concern.  
• HMRC already have sufficient tools at their disposal to tackle much of the non-compliance and fraud seen throughout the umbrella sector. Any proposed legislation that is implemented would have to be accompanied by a pledge of further resources to the relevant investigatory teams to maximise compliance and returns to the Government.

With the Government’s Consultation closing on 29 August 2023, we, alongside all those who attended the roundtable, will keep a close eye on developments and look forward to receiving the Consultation’s outcome in due course.