With fraudulent activity widespread among a minority umbrella companies, trust can be hard to earn within the contracting payroll market.

Frequent updates to HMRC's list of named tax avoidance schemes, promoters, enablers and suppliers is a stark indication that workers and hiring firms need to reserve their trust until they have carried out thorough due diligence into the umbrella companies they are being paid by or they are looking to engage. The list currently names around 100 schemes and is by no means complete. We have previously written about how the list works here.

Even with due diligence, the sector's lack of regulation and the increasingly sophisticated tax avoidance schemes in operation are making illegal activity harder to identify, further eroding trust.

This is why, when the PCA launched last year to provide a benchmark by which to identify compliant payroll companies, we made several key decisions to make us stand out as a trusted compliance accreditor. We outline a few of these here.

Trusted business model

In the UK there are many accrediting organisations across a broad range of industries that are set up as not-for-profits or charities. In the outsourced payroll sector, the PCA is unique in adopting this model.

Setting up as a not-for-profit means that the PCA's overriding purpose is to provide a service to our members and protect workers, not to make a profit. Any surplus after running costs have been covered, including appropriate renumeration, are reinvested into the PCA for the benefit of our members and to develop our service. This purpose is stated in our Articles of Association and dictates our approach to everything we do.

Our Board of Directors are not involved in payroll services and remain independent, motivated only by a desire to offer protection to recruitment companies and workers put at risk by unscrupulous umbrella companies, and to provide the opportunity for legitimate operators to show their compliance.

Trusted partners

To become a member of the PCA, applicants must undergo a forensic audit process on the payroll company's organisational structure, internal processes and financial procedures to demonstrate that they comply with current UK employment legislation.

The PCA's approach to ensuring the audit would be sufficiently rigorous and earn the trust of the industry, we opted to work with global 'big four' professional services firm PwC. This partnership gives both the PCA and our members the assurance that our accreditation is meticulous and that our green tick can be trusted.

The audit process, which typically takes three months, comprises a minimum of 150 elements, depending on the payroll model and includes a review of all commercial agreements, employment contracts, Key Information Documents and all other relevant documentation. More information on the audit process is available here.

Another crucial component for the PCA is our legal partner, Fieldfisher LLP. The multinational law firm worked with the PCA to build our legal framework as a not-for-profit, and the rules that we are governed by. This is significant because it gives our organisation a strong legal foundation to work with and protects our members and the PCA. This is because we have a legally sound framework through which we take on and, where necessary, police or remove members, as well as carry out appeals procedures with an independent panel, among other processes.

This robust legal grounding and ongoing partnership also sets the PCA apart from other accrediting organisations in the sector. Working with a reputable law firm was a key decision from the start of our journey to ensure that the PCA can demonstrate its integrity and garner the sector's hard-earned trust.