Crawford Temple, CEO and founder of Professional Passport, takes a longer view.
The government is planning to introduce new legislation in April 2026 that will see a shift in PAYE responsibility to recruitment agencies. While I understand the intentions behind the proposed changes, I believe there is a more effective approach that would achieve the same goals without unnecessary disruption.
Our economy can’t afford more financial burdens
British firms are currently navigating extremely difficult economic waters. Rising employment costs are already straining balance sheets across sectors, and the impact of Trump tariffs has created additional pressure on international trade and the global economy. This is simply not the time to implement costly regulatory changes that will place further burdens on businesses and workers.
The current proposals will require significant implementation costs for thousands of companies. Without effective enforcement – which would require substantial resources – promoters of tax avoidance schemes will likely disregard the rules and continue operating as usual, leaving compliant businesses at a disadvantage. Once again, that elusive level playing field will remain uneven as we see a race to the bottom.
The enforcement challenge
Enforcement is key to any new legislation but let’s be practical about the enforcement challenges. Currently, there are approximately seven hundred umbrella companies operating across the sector. The proposed changes would scatter compliance enforcement across more than 20,000 entities. The levels of non-compliance we currently see across the market have continued to grow entirely due to low enforcement and action taken by HMRC, therefore providing incentives for these schemes to flourish with low risk and high reward. Until the scales are rebalanced, legislation alone will not change this dynamic. It surely must be simpler, and more effective, to have a regime that monitors seven hundred companies than tens of thousands.
I fully support the proposals under consultation on “Closing in on promoters of marketed tax avoidance” and “Enhancing HMRC’s powers: tackling advisers facilitating non-compliance” and these measures should be implemented as soon as practically possible. Where I differ is how we address the current situation.
HMRC has the powers and the data
HMRC already has extensive legislation that allows it to effectively deal with the non-compliance issues across the sector. Furthermore, it possesses powerful data that remains underutilised. The information gathered through Real Time Information (RTI) reporting and Employment Intermediaries Reporting provides comprehensive visibility into payment structures and potential compliance issues.
Instead of creating new regulatory burdens, we should focus on using the current legislative framework more effectively and developing tools to analyse and compare these existing data sets. This approach would immediately highlight companies that appear to be “gaming” the system and provide a targeted approach for HMRC enforcement.
A collaborative solution
HMRC, policymakers and the entire supply chain must work together to root out criminal and non-compliant activity. At Professional Passport, we’re prepared to be part of the solution. We’re willing to require all our accredited providers to authorise HMRC to highlight any provider that falls outside agreed returns. We would make this a condition of continued accreditation and would immediately remove market access from any non-compliant provider, allowing HMRC time to conduct proper inquiries.
This approach builds on the fact that the main market has already moved to operating with accredited providers only.
Many benefits with one approach
My alternative approach delivers multiple advantages for all stakeholders. The Treasury would still achieve its revenue objectives while establishing a stronger collaborative framework between the sector and HMRC. By severely limiting market access for non-compliant promoters and keeping enforcement focused on just seven hundred companies rather than 20,000, we would avoid significant costs and market disruption. This more targeted strategy would enable faster action with substantially reduced costs, creating a more efficient compliance ecosystem that benefits compliant businesses and the government alike.
Time for reconsideration
I firmly believe that implementing these actions would transform the market in a short period and allow for more accurate assessment of any remaining issues using a targeted approach.
I urge the Chancellor to reconsider the planned legislative changes and instead focus on maximising the potential of existing reporting frameworks, coupled with strengthened enforcement capabilities.
As our industry faces continued challenges, let’s pursue solutions that balance compliance with economic pragmatism. That way, the government would achieve its objectives without adding unnecessary financial and administrative burdens during these economically challenging times.
