How to report a non-compliant umbrella company

Thankfully, most UK-based umbrella companies are compliant with HMRC rules and regulations and have their employees’ best interests at heart. However, a few let down the industry and operate non-compliantly. Here is how to report a non-compliant umbrella company to the UK’s leading professional bodies (the FCSA and Professional Passport) and HMRC.

What is a non-compliant umbrella company?

A non-compliant umbrella company is a payroll provider that does not follow HMRC rules and regulations when processing their employees’ payroll. An example of a non-compliant umbrella company could be a tax avoidance scheme designed to reduce a worker’s tax liability deliberately. Another example could be an umbrella that unethically seeks to make more money – possibly by retaining accrued holiday pay by its workers. This has recently been discussed on social media, as unofficial third parties made some accusations against a “compliant” umbrella company concerning retaining accrued holiday pay.

Reporting unethical providers to professional bodies

If you believe that you’ve encountered a non-compliant umbrella company and claim to be accredited by a leading professional body (such as the FCSA of Professional Passport), contact the professional body immediately. Be sure to provide the information you believe proves the umbrella company is acting non-compliantly or unethically.

Having looked at the FCSA and Professional Passport websites, specific instructions explaining what you need to do to report malpractice within the contractor payroll sector.

Freelancer and Contractor Services Association (FCSA)

The FCSA’s Complaints Procedure details the information they require to process an official complaint formally. If an umbrella company is breaching the FCSA’s Codes of Compliance, the FCSA could immediately strip them of their FCSA accreditation. The FCSA Complaints Procedure is available here.

If you have a complaint to make about an FCSA accredited umbrella company, here’s what you should and shouldn’t do:

Do:

  • Report the umbrella company or payroll provider to the FCSA – without hesitation.
  • Provide the FCSA with factual evidence.
  • Follow the FCSA’s Complaints Procedure.
  • Maintain communication with the FCSA and seek updates on the process of your complaint.
  • Provide as much information to the FCSA as possible, and keep them updated if further evidence should be made available.

Don’t:

  • Withhold information from the FCSA.
  • Claim without supporting evidence.
  • Post information in the public domain before the FCSA has officially reached a verdict on the payroll provider in question. Spreading rumours is irresponsible.

Suppose you work for an FCSA accredited umbrella company or payroll provider, and you’re concerned that your company is acting unlawfully or are breaching the FCSA’s Codes of Compliance. In that case, there are whistle-blowing procedures in place. Providing your claim is legitimate and is being made in good faith – the FCSA will protect your identity.

The FCSA’s whistle-blowing policy states, “disclosures can be made verbally or in writing to FCSA’s Chief Executive who may invoke FCSA’s complaints procedure accordingly.” Therefore, if you work for an FCSA accredited umbrella and have concerns about internal procedures – contact the FCSA at your earliest convenience, and they’ll be able to provide you with further assistance.

You can read the FCSA’s whistle-blowing policy here.

Professional Passport

Reporting a concern to Professional Passport is easy, and you can do it by completing a simple form on their website (available here). The form asks you to provide your name, contact information, your place within the supply chain, the name of the company you have a concern regarding, and details of the concerns you have.

Professional Passport state that once they receive an official concern, they are likely to “come back and ask you, in the first instance, to supply any supporting documentation that you have supporting the concern raised.”

Professional bodies exist to promote compliance, and to tackle non-compliance

If you believe an umbrella or payroll provider is operating unethically – professional bodies such as the FCSA and Professional Passport are here to help. Please contact them with your concerns, and they’ll do everything possible to get to the bottom of the situation. These organisations work closely with HMRC to make ongoing recommendations to improve tax and payroll for the self-employed. Therefore, they’ll make it their priority to ensure self-employed professionals are fairly treated, and non-compliant operators are put to a stop as soon as they’re made aware of it.

Reporting fraud to HMRC

If you want to report suspected tax fraud (including a tax avoidance scheme, promotor of a tax avoidance scheme, or non-compliant umbrella company), you can contact HMRC directly. They have a dedicated phone line (0800 788 887) and online tax fraud reporting system. More information is available here.

Unfortunately, honest workers have used tax avoidance schemes in the past – by mistake. If you believe you have engaged with a tax avoidance scheme, HMRC is urging you to get in contact with them to settle your tax affairs.

Don’t let unethical companies get away with exploiting hard-working self-employed professionals!

If you discover a payroll company acting unethically, unlawfully, or not in its clients’ best interests – report them immediately. And as this blog shows – it’s pretty straightforward to report a non-compliant umbrella company or payroll provider.

Top 10 umbrella companies

Did you know that we’ve collated a list of our top 10 umbrella companies – and they’re all FCSA accredited? Click here to find out who has made it into our top 10. You’ll be pleased to know that some of the umbrella companies have special offers at the moment – perfect if you’re looking to join an umbrella for the first time or you want to switch to a more reliable provider.

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Click here to see our top 10 umbrella companies!

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