The Gabem Umbrella Companies Blog:
Home of Umbrella Company Gossip Online

The deadline for the PAYE review has been and gone, and although it's not specifically umbrella company news, part of what it describes could affect umbrella companies and contractors by a huge degree.

The first part of the review is actually quite reasonable and could possibly be applauded so long as their "Real-time information" was actually that and a two way street. The proposal as it stands is to use the BACS system, which is a strange choice because BACS isn’t really real-time, and might add the famous 3 days to when data is received. A lot of our umbrella company employees are paid weekly, and I know from speaking to many of them over the years that payments cannot afford to be late (it's part of the reason we still maintain a fairly easy and streamlined process for paying advances).

So BACS would have to go, to be replaced by a beefed up government gateway or nothing, it's as simple as that. I think most companies are right behind the idea that sending submissions and documents electronically to HMRC is the way forwards so we're happy to send our information over but we need a response at the same speed.

The second part of the review is probably the now famous\infamous "Centralised Deductions" which is where HMRC would take over the actual payroll functions of the employer. This of course holds extra horror for umbrella companies, but it would create problems for employees everywhere (not least for all the unemployed payroll people). Payroll departments aren't just there to mechanically process payments, they are there as both a sanity check of the final calculations and they help they people they are payrolling. Who would you call if you weren't paid?

It's extremely unlikely that "Centralised Deductions" will make it through the review, so it's probably safe to say we can all breathe a sigh of relief.

Modernisation in the public sector is always to be applauded but there is such a thing as biting off more than you can chew, and I think that's what's happened here.

Have a great weekend folks, and sorry for the lack of updates until now.

Hugo
@GabemUmbrella
24/09/2010