Crawford Temple ‘s warning advice to the supply chain as Off-Payroll rolls out to private sector

Crawford Temple is CEO of Professional Passport, the largest independent assessor of payment intermediary compliance. He has some advice for the supply chain as the roll-out of the Off-Payroll rules kick in today:

“With the new Off-Payroll rules taking effect from today in the private sector we are likely to see many contractors being required to work through umbrella firms so I would urge contractors, recruiters and hirers throughout the supply chain to carry out due diligence and understand what a compliant umbrella firm looks like. Compliant umbrella firms offer a legitimate contractor management solution that gives individuals all the benefits of employment whilst working on a variety of assignments and good umbrella firms are open and transparent in their dealings with workers and provide a clear contract of employment that explains how they will be paid, what deductions there will be and for what, how their expenses are paid and how their holiday pay is worked out.

“However, we know that we are likely to see a proliferation of disguised remuneration schemes posing as umbrella firms popping up to take advantage of those contractors who will be required to work through the umbrella model. Many of these contractors will be new to umbrella working and may be easily duped into signing up for a tax avoidance scheme which will ultimately put them under considerable financial risk.

“HMRC’s official guidance warns contractors to check the following to find out if they may be engaged by a disguised remuneration scheme: the company promises that you can keep 80, 90 or 95% of your income and be tax compliant; only a fraction of your salary is paid through payroll and subject to PAYE (indicating that you are only paying tax on some of your income); you are paid using a loan, credit of investment payment and the company claims this isn’t subject to income tax of National Insurance Contributions (this is tax avoidance); and the payment from your umbrella company is routed through various companies before it reaches you.

“It has vital to seek out a compliant umbrella and ask key questions. Understand the warning signs and what to avoid when looking at the providers in the market. It is this detail that will determine if it is an umbrella company or a ‘have I got a good idea for you’ scheme and best avoided.”

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