REC calls for HMRC to set up dedicated umbrella company hotline to easily report malpractice

The Recruitment & Employment Confederation (REC) has suggested that HMRC set up a dedicated umbrella company hotline to report non-compliance, unethical behaviour, and malpractice. What a jolly good idea! Keep reading and find out more.

Non-compliant umbrella companies must be reported

If you ever come across a non-compliant umbrella company, you must report them to HMRC. While most UK-based umbrellas are fully compliant with HMRC’s rules and regulations, a few are giving the industry a bad name. Assuming you choose a compliant umbrella for your payroll – you’ll be paid compliantly (PAYE) and will have nothing to worry about. However, engage with a tax avoidance scheme (even by mistake), and you could be on the receiving end of a life-changing HMRC tax investigation.

Most recently, we’ve written an article on mini umbrella companies (MUC) – the latest non-compliant umbrella company model to impact the UK’s temporary workforce. It’s a good idea to check the umbrellacompanies.org.uk blog frequently, as we’re always writing about dodgy schemes when they come to light – to help contractors make better decisions about their payroll.

“An HMRC-run hotline for reporting bad practice by umbrellas would make it easier for workers to report abuses”

In a recent article, the Chief Executive of the Recruitment & Employment Confederation Neil Carberry, said:

“Recruiters want a robust and fair supply chain, where workers’ rights and pay are protected and all parties’ responsibilities are clear. Bad-faith umbrella companies have been allowed to thrive alongside compliant businesses for too long. An HMRC-run hotline for reporting bad practice by umbrellas would make it easier for workers to report abuses, and help government bodies to coordinate their efforts to stamp out bad practice. It is essential that the government regulates umbrella companies as a matter of urgency to protect both workers and recruitment agencies.

Of course, employment businesses also have a responsibility to make sure they operate with fairness and transparency, and for our part, the REC will continue to ensure our members do this. Workers should always know who they are employed by, and we worked with government on the introduction of the Key Information Document (KID) to ensure everyone has this information. We urge all recruiters to always conduct rigorous due diligence on their supply chains, and I have written to all our members with new guidance to help them do so – this is more important than ever right now.”

REC has been encouraging HMRC to regulate umbrella companies for years. Their article suggests a series of measures that’ll help protect workers and ensure the supply chain remains compliant. These are:

  • Set up the dedicated umbrella company hotline so that any stakeholder in the temporary worker marketplace can easily report non-compliant payroll providers.
  • Create a “legal definition of umbrella companies” that the government can use when starting regulation preparations.
  • Guide all REC members to help them make well-informed decisions. It’s our opinion this information should be made available to the entire supply chain – and not just REC members!
  • “Re-affirming and clarifying the REC’s Code of Professional Conduct”. In a recent article (Should umbrella companies be regulated?), we suggest that HMRC works with the FCSA and Professional Passport to collate complete Compliance Codes. REC would also be a valuable stakeholder to have involved with creating these Codes of Compliance. The more bodies involved (assuming they’re committed to compliance and protecting temporary workers) – the better.

What do we think of the proposal to create a dedicated umbrella company hotline?

We’re all for it! If an umbrella company is behaving unethically, it must be reported. We recently wrote a blog about how to report a non-compliant umbrella company. However, while it’s full of helpful information, there are many ways to go about it. Therefore, a dedicated umbrella hotline would be beneficial because it would simplify the process and encourage more people to come forward with information. 

Top 10 umbrella companies

When selecting an umbrella company – compliance is everything. That is why we’ve created our top 10 umbrella companies. They’re all accredited by either the FCSA or Professional Passport. And, some have special offers on at the moment! Check them out. 

The Complete Umbrella Company Guide - Download Now

Click here to see our top 10 umbrella companies!

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