Whether Umbrella PAYE, CIS or the increasingly popular PEO models, both recruiters and contractors have found benefits in working with specialist organisations such as ours to handle the tax and legal implications of contractor engagement.
 
The HMRC recognises the importance of the Umbrella sector and its legitimate engagement of workers and has published their guidance for contractors engaged through Umbrella PAYE
 
Behind the scenes, HMRC have been aggressively pursuing promoters of Mini-Umbrella (a VAT and NI evasion model) via their VAT compliance teams, retrospectively cancelling the entire input VAT value for the affected agency from all invoices paid to the Mini-Umbrella company.
 
They are also applying the Kittel Principle, stating that either the recruiter knew of the evasion or should have known, to place a significant debt burden on the recruiter and in some cases have transferred part of this heavy liability onto Directors personally.
HMRC are also openly naming and shaming tax avoidance schemes with a bias towards the repeatedly discredited Contractor Loan schemes.
With these, the initial challenge comes to the contractor themselves receiving significant tax bills years after the work was completed. If you’ve referred a contractor to such a scheme, expect them to contact you and share their concerns.
However, in a challenging market the use of qualified, accredited outsourced employment services is beneficial to recruiters and, when administered and presented appropriately, contractors with continuity of employment at its heart.
NumberMill Accounting can support your organisation navigate this. End-hirers and agencies have engaged us to:
–  Conduct reviews of contracts of engagement with sub-contractors, agencies/other intermediaries that may be within the supply chain.
–  Issue questionnaires to main suppliers to understand the work force that they engage and how they engage them.
–  Collate and assess the responses in order to identify the areas of risk within the supply chain.
The reports we produced enabled our clients to remove dangerous liabilities from their supply chain, were evidence they met their due diligence obligations ahead of any HMRC investigations and reassured stakeholders that risks had been managed.
If you are intending to sell any time in the next few years, this becomes doubly important as a potential buyer identifying non-compliance in your supply chain during their due-diligence can result in a much reduced valuation or even the termination of a deal.
For a confidential discussion on the subject, please contact us using the details below and speak to one of our specialists:
Call us: 0333 121 2001
Email us: referrals@numbermill.co.uk
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