On 29th August, the consultation into the use and position of Umbrella companies in the UK closed. What can be expected next? Nothing soon.
This hefty consultation may take a while. But not only are the HMRC, HMT and the Department for Business & Trade looking at defining what an umbrella company is and how to enforce compliance, but we are looking at potential fundamental change to the how the UK recruitment industry is structured. Due to the nature of this and how it could affect the industry, there will be a huge number of responses from individual Umbrella companies, industry bodies like the FCSA and Professional Passport, and from the recruitment sector itself. There will be a lot of reading to do and many considerations to explore.
While the goal of this consultation may seem simple – “tackling non-compliance in the umbrella company market”, there is a major hurdle to overcome in the early part of any future developments. We need to answer the question; what is an umbrella company? Section 3.6 of the consultation states “the government is mostly concerned with seeking views on the two proposals for defining umbrella companies, given there will be a further consultation prior to introducing any specific requirements on umbrella companies.” So, before any regulatory changes take place a definition needs to be…well…defined!
After this fairly major stage, there is likely to be a period of analysis and development of a response to this consultation. Considerations will need to be made regarding when an announcement could be made. Autumn 2023 may prove too soon a deadline, so we could be looking at Spring 2024 as the first time any comments may be available. Any changes will be considered by the government and policy will need to be changed, as you can see none of this is an easy or swift decision-making process.
The other elephant in the room is who pays for this, what department does it sit under, who will manage any regulatory body. With an ever-decreasing budget, is this the time to add further cost to already stretched departments. Although the potential to claim more in missed PAYE tax and National Insurance contributions may be a deciding factor.
In summary, tackling non-compliance in the umbrella company market is the aim and for all those non-compliant Umbrellas, this will happen, but the question still remains when? Throw in a general election and the wait will continue.
Do you have any questions on this article? Reach out to the Bishopsgate team, on this, or any other umbrella payroll concerns you might have.