A new report, “The Good, The Bad and The Ugly” has been published to address the issues of non-compliance in the umbrella sector. Written by Professional Passport the report calls for a number of short-term and longer-terms plans to be put in place that will help build a more open, compliant and orderly marketplace without the need for more legislation and regulation.
In the short-term, Professional Passport proposes:
HMRC Umbrella Pay Calculator: HMRC should develop a calculator hosted on .gov website so that checks can be made by workers with the output providing a detailed breakdown of all costs, including employment costs. This would afford HMRC the chance to highlight common areas where disguised remuneration or other hidden costs could be found. The illustrator could include a reporting function for users to report any anomalies when matched with HMRC’s illustration. This would provide valuable intelligence to help inform enforcement.
HMRC Umbrella Payslip Checker: In developing the calculator it would be relatively simple to add an umbrella payslip checker so that the workers’ payslip data could be checked for accuracy and any concerns could be reported to HMRC. It would also provide an opportunity for HMRC to promote the Personal Tax Account which serves to validate the payslip information. Again, it will help to marginalise the providers where false payslips are being produced.
Benchmarked PAYE rate: All roles advertised, where the rate offered is not PAYE, should use a set formula to create a benchmarked PAYE rate that must also be shown. This allows a worker a common currency when assessing the true value of roles.
Status Indicator: To assess any assignment, contractors must understand its Off-Payroll status as well as Supervision, Direction and Control. Whilst the status can only be finalised once the worker has been considered, this should indicate a provisional status. In many instances, the workers input is unlikely to alter the outcome.
Many of the quick wins proposed are genius because they are so simple, yet have the potential to be extremely effective. In combination these have the potential to revolutionise the sector, bringing authoritative clarity to workers whilst also ensuring that immoral providers cannot hide behind complex pay calculations.
The report goes on to propose a new framework which will ensure that the variance compliance accreditations within the sector are genuinely accountable for the behaviour of their members. If an accredited member fails, and the accrediting body has not taken adequate steps in upholding their compliance standards then that body would be liable. The concept has proven effective in the financial services sector, so there is no reason why it should not succeed in the umbrella sector too.
There would need to be a clear framework of operational processes, most of which already exist on an informal basis. It would then also align enforcement with the standards and ensure a far more robust and joined up approach. In addition, this proposal would be a viable alternative to the cost and complexity of government-controlled centralised regulation.
Better Use of Data
For many years we all been frustrated by HMRC’s apparent lack of enforcement within the umbrella sector, and they do not use the tools available to them. As the report points out HMRC has access to huge volumes of information through both RTI and agencies’ monthly intermediary reporting data, which if cross-referenced would provide significant intel enabling them to identify potential disguised remuneration schemes. It is so obvious that it’s ludicrous it does not already happen!
The overriding message of the report is clear – the government simply must intervene. It is unacceptable to knowingly keep on turning a blind eye to the poor practices which systematically exploit innocent workers. The whole industry wants change, workers want change, and most importantly, these workers deserve change.