The FCSA, the UK’s leading professional body committed to ensuring the supply chain of temporary workers is compliant with UK tax law, has updated its Charter in response to concerns raised by third parties. Rather than approach the FCSA in a calm and collected manner, some stakeholders were quick to point fingers and question the FCSA’s integrity regarding its stance on members operating offshore. As a result, the FCSA has acted – as we explain in this article.
Previous updates to the Contractor and Freelancer Services Association’s (FCSA) Charter have recently faced scrutiny within the sector. A recent article on Computer Weekly suggested the FCSA were happy for members to operate offshore umbrella companies – the same types of arrangements that have been linked to tax avoidance.
The confusion arose when the FCSA#s Charter apparently implied they were okay with its members operating offshore – providing “offshore operations do not make up more than 25% of their business.”
Interestingly, and perhaps surprisingly, fellow professional body Professional Passport was not prepared to jump to the defence of the FCSA or look to reassure stakeholders that perhaps the terminology in the Charter had been misinterpreted or not written as well as it should have been.
Crawford Temple, CEO at Professional Passport, told Computer Weekly:
“This revelation that the FCSA is allowing its members to use offshore models is shocking. We have seen many reports of non-compliance operating in the sector and clearly offshore structures have come under close scrutiny along with other forms of disguised remuneration.
Our [umbrella] sector has come in for a lot of criticism of late and the news that the FCSA is permitting offshore structures will be damaging.
This news [of the Charter change] now reinforces the fact that Professional Passport is the only compliant standard that strictly prohibits any money being transferred offshore or workers being paid money from offshore.
Such malpractice provides a serious risk to the entire supply chain, contractors, agencies and hiring clients, and we vehemently oppose it.”
Mr. Temple was quick to change his tune once the FCSA updated its Charter (more information below). He told Computer Weekly:
“We’re pleased to see that the FCSA has clarified its position on offshore schemes and cleared up the confusion that arose. It is important that the industry works together to promote good working practices throughout the supply chain and stamp out any malpractice.”
For more information on the accusations faced by the FCSA, read our article: Déjà Vu: The FCSA Is Under Attack Again For Promoting The “Highest Standards Of Compliant And Ethical Behaviour”
The FCSA’s response via LinkedIn
Despite having the very best intentions, the FCSA never seem to catch a break and are always defending themselves. In response to the accusations they were okay with members operating offshore, a company LinkedIn post was published. It stated:
“FCSA only exists to promote a fully compliant choice within the supply chain of outsourced workers. We protect the contractor and the supply chain by providing assurance that an FCSA company is fully compliant with UK employment law and tax regulation. This is achieved by independently assessing all FCSA Members against a comprehensive set of Compliance Codes and a Charter of ethical behaviour and standards.
We were made aware that 1.1 of our Charter may not fully represent the meaning behind the wording and may not fully encompass the FCSA Codes that already exist. As a result, we have expanded 1.1 of our Charter to ensure there can be no misunderstanding.
At no point in our history have we supported anything other than the correct and lawful treatment of taxation and would never support any form of tax avoidance scheme on either UK or offshore soil. Nor would our member companies.
As a result, we have made this clear within our Charter which can be found here: https://lnkd.in/ePDuNEA7.”
The FCSA’s updated Charter
To reassure its members and the contractor payroll sector, the FCSA updated its Charter (expanding point 1). The new terminology makes it extremely clear that the FCSA “does not permit offshore arrangements/solutions or structures that seek to evade or avoid UK tax regulation or employment rights as set out in the FCSA Codes”.
The new and extended point 1 labelled ‘General’ is below, and you can access the latest October 2021 version of the FCSA’s Charter here.
1.1. FCSA Members shall be UK-based firms that do not provide more than 25% of their operations outside of the UK. The FCSA does not permit offshore arrangements/solutions or structures that seek to evade or avoid UK tax regulation or employment rights as set out in the FCSA Codes.
1.2. Members shall at all times act in the best interests of the contractor support industry and will not act in a way likely to bring the industry into disrepute.
1.3. Members shall assist in improving the public understanding of the contractor support industry. Members shall neither disparage nor engage in any conduct that could jeopardise the welfare of their employees/clients, FCSA or other members.
1.4. The FCSA will apply a Fit and Proper Persons test to prospective members who are:
1.4.1. Running business either on their own or in partnership with another.
1.4.2. Able to direct the business – this includes directors and shadow directors, whether they’re based in the UK or overseas.
1.4.3. ‘Beneficial owners’ of the business (you’re a beneficial owner of a business if you own or control more than 25 per cent of it).
1.4.4. ‘Officers’ for the business.
1.4.5.Shareholders who own or control more than 25 per cent of the shares or voting rights in the company.
In determining a person’s honesty, integrity and reputation, the FCSA will have regard to matters including, but not limited to, those which may have arisen either in the United Kingdom or elsewhere.
What are your thoughts on the FCSA and the updated Charter?
The team at umbrellacompanies.org.uk does everything possible to ensure relevant news affecting the umbrella company industry is posted quickly. However, we would love to get our readers thoughts on our recent articles about the FCSA and its Charter. What are your thoughts regarding the FCSA and their work to ensure the supply chain of temporary workers is compliant and ethical? Should they have updated the Charter in response to the recent reports that they’re happy for members to operate offshore? Please comment below.
Top 10 umbrella companies
Are you looking for a compliant umbrella company you can trust? If you are, you’ve come to the best place. We have collated a list of our top 10 umbrella companies, and they’re all accredited by either the FCSA or Professional Passport (the two most respected industry bodies). Please check them out – some have special offers at the moment!