The government is coming under increasing pressure to impose more regulation on umbrella companies in the UK. The calls come amid growing concern over workers’ rights and the financial cost that umbrella company abuses have for the treasury, taxpayers and freelancers.
Firstly, a draft policy has been compiled by Employment Status Forum chair Rebecca Seeley Harris and offpayroll.org.uk founder and inniAccounts CEO James Poyser. The document was submitted to Jesse Norman, Financial Secretary to the Treasury, and Paul Scully.
The draft claims a lack of regulation in the umbrella industry has resulted in incorrect employer NIC payments, the abuse of tax relief schemes and contractors missing out on holiday pay. The draft policy comes in the wake of a BBC report which found that 48,000 “mini umbrella” companies had been founded in the UK within the last five years for the purpose of reducing tax and NICs.
The document puts forward several suggestions including the urgent appointment of a new director of labour market enforcement and a decision on whether an enforcement body should be formed or the Employment Agency Standards Inspectorate should have its remit to oversee regulation expanded.
Seeley Harris commented: “It is paramount that the regulation of this industry is expedited because of the rise in the use of umbrella companies as a result of both the coronavirus pandemic and the off-payroll working rules forcing people through non-compliant umbrellas.
The Trades Union Congress (TUC) has also called for more regulation of umbrella companies in order to protect the freelancers who use them.
Meanwhile, IPSE Director of Policy Andy Chamberlain has said that the reports about mini umbrella companies are merely “the tip of the iceberg” and that tightened regulation was “long overdue”.
