Do you know your Labour provider?
Over the years it has become a fairly common practice for UK based recruitment agencies to use “umbrella companies or intermediary companies”. These companies are essentially payroll companies that recruitment agencies engage with to make savings on National insurance contributions and operate a PAYE system for the agency workers. People working under these arrangements experience a magnitude of problems ranging from a lack of transparency over core terms and conditions to unwittingly becoming embroiled in fraudulent tax arrangements, with serious financial consequences. [1]
The government has released new guidance for UK based recruitment agencies and the end businesses that use temporary labour that are placed with such umbrella or intermediary companies. On speaking with North East businesses, we have identified that many end clients don’t know that recruitment agencies are utilizing such umbrella and/or intermediary businesses to payroll the temporary workforce, thus, due diligence and checks with the supply chain is essential.
The Criminal Finances Act 2017 makes companies and partnerships (relevant bodies) criminally liable where a person acting on their behalf (associated person) facilitates tax evasion. The new law makes it easier for relevant bodies to be held to account for non-compliance without proof of criminal intent or the knowledge of senior managers. [2]
If your labour supplier engages with temporary workers and they use avoidance schemes with or without your knowledge for their payroll, your workers, the supplier and you the end business are at risk of tax compliance checks, penalties and outstanding liabilities. The supplier and hirer are also at risk of unrepairable reputation damage that may result in a significant loss of business. It could cause your business to fail.
So the question is… Do you know who your Labour provider is? Do you know their processes?
Based in the North East GEM Partnership provides total workforce solutions which deliver tangible results for your business. We will identify, recruit and train your personnel allowing you to bolster your operations, retain talent and unlock the potential of your most valuable asset – your team. GEM Partnership don’t use any umbrella or intermediary companies, all of our payroll is in house. Meaning that every associate we place within your business is paid directly from us, with true deduction of tax and National insurance paid to HMRC.
If you are unsure of any of the detail we’ve raised above and would like a conversation around how we can help your business then get in touch using the details below:
Maria Miller – Operations Director
Maria.Miller@gempartnership.com
0191 587 2999