Susan's Legal Bits

In July 2010 Susan was interested in...

...umbrella companies compliance checking

Hello everybody.

This month we have had the emergency budget (no real effect on umbrella companies I’m glad to say), a query regarding childcare voucher schemes being run by umbrella companies (still untenable I’m afraid) and a warning from HMRC to the Recruitment and Employment Confederation’s new Industrial Sector Group that travel and subsistence schemes should be checked and double checked as they are on their way to investigate!

Interestingly enough from reading various articles ‘umbrella’ companies were referred to by name at this meeting and it was suggested that agencies using umbrella companies (to outsource the payroll of their temps) should actually check the umbrella’s expenses schemes to ensure compliance.

From my brief reading on what is out there about this meeting it seems to imply that agencies are going to be encouraged to check and really understand (perhaps even sign-off on) how the umbrella companies work. How tiresome for the agencies… and I wonder if this is a set-up for future liability claims…..

However… From personal experience I can tell you that the reputable agencies out there have already done extensive diligence checks on the umbrella companies they want to use and, umbrella companies who want to be on an agency’s preferred supplier list (i.e. the only ones they will allow their temps to use) have to complete vast pages of questionnaires as well as attaching for the agency’s perusal policies, example documents and other supporting documentation to get past their internal compliance officers. I therefore think, as usual, the organisations that are up to date and forward thinking are ahead of the game here. I know that here at Gabem we are completing compliance questionnaires every day of the week and welcome it. If there are agencies out there that don’t do these checks then perhaps they will have a wake up call when one of the umbrellas they deal with are hit by HMRC.

As always I embrace the movement of HMRC towards finding any entity that breaches the rules and regulations set down by law. My only comment and desire based upon this new development is that, if a recruitment agency does find an umbrella company not reaching standards, will they be forced by legislation or REC standards to report them to HMRC and indeed… will HMRC follow through? It will be interesting to see this develop. Looking ahead I can see the potential of recruitment agencies bringing down umbrella company providers by the touch of a button --- but I haven’t quite worked out what would be in it for them yet!!

Have a great July everyone!

All comments provided on my blog are for informational purposes only. My thoughts and opinions are my own with agreement from my employer as being suitable for sharing with the wider world. Any advice, or writing that might be taken as advice, should not be deemed in any way as professional Legal advice and are only the musings of a HR practioner whose sole aim is to help where she can.