London - 27^th July 2023

Representatives of the PCA attended a highly informative seminar focussing on the regulation of the umbrella market in London at the end of July 2023. Hosted by the eminent Lawspeed organisation, the seminar was attended by members of both the Treasury and HMRC who were keen to canvas feedback and opinions from an audience largely comprised of recruiters with regards to the ongoing 'Tackling Non-compliance in the Umbrella Market' consultation which ends on the 29^{th of} August 2023.

The consultation follows on from the initial Call for Evidence initiative which received in excess of four hundred submissions from contractors and payroll professionals before it closed in February 2022, Unsurprisingly, the panel reported that most of these submissions painted a negative picture of the industry although they also acknowledged that this was to be expected given the very nature of the exercise. In contrast, when the audience was asked if they were in favour of eliminating umbrella companies, the answer was a resounding no although delegates expressed a desire for more regulation to highlight those compliant providers who provide such an essential service to the assignment-based supply chain.

The complexity of the debate became starkly apparent when a lengthy debate ensued as to the very definition of an umbrella company. Clearly, before any notions of regulation can be considered for statute, a universally agreed and recognised set of criteria has to be established as the baseline to distinguish between compliant and non-compliant providers. The intensity of the discussion and the forensic analysis of the actual wording of such a definition, illustrated the problems facing the Government when attempting to introduce a form of regulation that will indeed create 'a level playing field' commonly understood by the market.

Other contributions focussed on the continued popularity of so-called mini-umbrellas which remain seductively active in the sector, plus examples of acts of tax avoidance/ evasion committed by various providers, many of whom are well-known and established payroll firms. The scale of the problem facing recruitment agencies in particular, was highlighted by anecdotal tales from the floor of consultants receiving dozens of enquiries from umbrella companies on a weekly basis all promising ever more lucrative schemes to reward unsuspecting agencies and their contractors.

The seminar lasted for over three hours and the passionate contributions of the audience reaffirmed the scale of the issues facing the Treasury and HMRC, plus those businesses who are committed to paying hard-working contractors fairly and accurately.  It goes without saying that the PCA supports the aspirations of the Government to banish rough practices and providers from the sector, although we recognise that the timeline for active regulation still seems a long way off.

The 'Tackling Non-Compliance in the Umbrella Company Market' consultation closes on the 29^{th of} August 2023 and interested parties can make their submissions here:

public.enquiries@hmtreasury.gov.uk