This week the government has issued its response to the consultation on tackling non-compliance in the umbrella market as well as its plans on introducing zero hours measures to agency workers.
Commenting on tackling tax avoidance in the umbrella market, Crawford Temple, CEO of Professional Passport, the UK’s largest independent assessor of payment intermediary compliance said: “The Government will be pressing ahead with its plans to tackle tax avoidance and put the onus on agencies to operate PAYE correctly. However, there are many unanswered questions still and the true impact of the changes will only be fully understood once the draft legislation is provided and we can fully understand the size of the task facing agencies and providers so they can adequately prepare ahead of April 2026.
“Of course, none of these changes would have been necessary if HMRC had used all the data and intelligence they already have at their disposal to shut down the non-compliant providers quickly and effectively,” Crawford added. “HMRC needs to step up and we know that legislation is not the sole answer and must be supported with visible compliance and enforcement which has been lacking from HMRC in recent years.
“Yesterday’s announcement also clarified the Government’s intention to define and regulate umbrella companies,” Crawford continued. “However, any definition needs careful consideration as any definition can be re-engineered and could open the doors to further non-compliance. Government needs to tread carefully in the implementation of its plans as any loopholes could simply lead to further exploitation of the rules and another boom in non-compliance.
“We also heard that regulation will take effect. However this is with regards to employment rights which is laudable and will not encompass umbrella market regulation,” he concluded.
Also commenting, Dave Chaplin, CEO of contracting authority ContractorCalculator said: “I welcome the long overdue regulation of umbrella companies and the measures to closedown the widespread non-compliant schemes.
“The government’s new measures mark a major step forward in protecting workers and tackling tax non-compliance. Shifting PAYE responsibility to agencies and end clients is a game-changer, ensuring taxes are properly collected before rogue umbrella companies can rip off worker and the exchequer with non-compliant practices.
“Regulating umbrella companies will finally bring accountability to an industry that has operated unchecked for too long,” he said. “The fight against tax fraud and unfair deductions isn’t over, but these reforms lay the foundation for a fairer labour market.”
