Full Payroll Compliance Auditing for Umbrellas

A new service has been launched by PayePass which tracks and verifies the full journey of monies paid to an umbrella or outsourced payroll provider.

Growing problem of skimming

We have long been aware of scams taking place within the temporary workforce sector which is exacerbated by the lack of visibility over what happens to money once it is paid to an umbrella or other payment intermediary.  In recent year there has been a significant increase in ‘skimming’ where small amounts are taken from the amount paid to the payroll provider, and because there is a negligible impact on workers’ net pay it is incredibly hard to spot this practice.  As you can imagine, the perpetrators are able to steal significant sums of money when skimming at scale, and usually entirely undetected.

Other scams

We have heard a lot about holiday pay monies being inappropriately retained, or as some would say, stolen from contractors.  For recruitment agencies and end-clients it is almost impossible to know if this practice is going on within their supply chain because it doesn’t affect contractors’ pay nor their payslips.

We also know that some intermediaries operate disguised remuneration schemes unbeknownst to either the recruitment agency paying them or the contractor/worker engaged via them.  Broadly, these work by diverting most of the contractors pay into a loan scheme (or similar) and the remaining small proportion is subject to tax and NICs.  Again, these can be hard to detect particularly as fake payslips are usually produced.

The big problem

The trouble with skimming and the other scams we’ve outlined is that they are very hard to detect, and on the surface these operators may well appear to be compliant – auditing payslips will not necessarily give them away.  The big problem is that dubious practices happen to the monies after they’ve been paid to the umbrella or payroll provider, but before those funds reach payroll.  This means that a simple payroll audit is not going to detect them as the mischief has happened before that point.

What is really needed is a fully tracked audit which follows the journey of the funds paid to the intermediary right through to payment to the contractor/worker.  And that is why we are so interested in what PayePass, launching this week, has to offer.

So what does PayePass offer then?

PayePass is a cloud-based platform designed by experts with decades of combined experience within the payroll, accountancy, umbrella, legal and recruitment sectors.  It is high-tech payroll software which has a very interesting module, PayePass Verify which has grabbed our attention.

PayePass Verify tracks the full journey of monies received by an umbrella or payroll company through all their processes, up to and including payments to workers, HMRC and others due a payment.  The independent audit gives assurance of no skimming, no tax avoidance and appropriate payments made to HMRC.

The system checks for things like:

• secret profits being skimmed off on the side
• practices that might withhold money from contractors or HMRC
• potential tax avoidance or tax evasion

In short, PayePass Verify removes any element of doubt and risk regarding the financial processing of all monies.  It’s important and relevant whether you are a contractor, a recruitment firm or an end-client.

Is it any good?

What we particularly like about it is that there is nowhere to hide, meaning that it’s impossible for any mischief to be taking place undetected.  So any umbrella or payroll intermediary that has achieved the Verify status has proven and had independent confirmation that they deal with your money properly.

It is surprising that not all umbrella compliance tests and PSL services in the market require this level of financial verification, hopefully it will only be a matter of time!  Because, from our dealings with workers affected when things go wrong, this type of independent financial audit is definitely needed.

It’s early days, but certainly here at IWORK we’re very supportive of the concept of PayePass Verify, in the same way that we are to any other compliance provider in the umbrella sector.