Umbrella Company

Pre Budget Statement: Umbrella Company Review Is Welcome



In yesterday’s pre budget statement, Chancellor George Osborne announced that he intends to review the use of “so-called umbrella companies that deprive people of basic employment rights like the national minimum wage and, as a result, avoid tax” and in addition, a discussion around likely action to be taken in Budget 2015 will shortly be published to inform of possible action relating to home-to-work travel expenses for those individuals using umbrella companies.

Lyndsay Shimmin, Operations Director, confirmed this as a positive move for the sector and says the umbrella company review is welcome.

“As we have always stated, Green Lantern operates an umbrella company which complies with all relevant legislation, including ensuring that all of our obligations around National Minimum Wage are complied with and verifying expense claims of all kinds, including travel to a temporary workplace.

Our robust procedures in this area are reviewed regularly by Professional Passport. We provide employment and guidance to expert employees around the UK and welcome our opportunity to highlight our proper practices with the Government.

Of course we know that not all umbrella companies operate in this way. Many do not adhere to National Minimum Wage requirements and allow flagrant abuse of HMRC’s clear expenses rules, which has led to this Government review of practices in our sector. We see this as only a positive step as those companies which do not have regard for HMRC will at last be forced to either improve, leave the industry or risk exposing all parties to potential tax bills and penalties – these companies deserve to be reviewed by HMRC and their unfair practices must be stopped.  We will then be left with a sector where those umbrella companies which operate properly will be confident that they can continue to offer a considered, long term approach to their contractor employees.

Our recommendations to recruitment companies have always been that they build a PSL around suppliers who are verified by an external body, and Professional Passport can assist with confirming the status of an umbrella company, as they have done with us here at Green Lantern. As recruitment companies will have to comply with the new reporting requirements as of April 2015, it is now more important than ever that a recruitment company works with only those suppliers who have had their processes verified in this way. We can assist with recruitment companies’ reporting requirements and of course, will continue to work with HMRC and Professional Passport to ensure that any new legislation and guidance is fully adhered to.”

For further information on ensuring that you only work with partners who operate in a compliant way, please contact us on 0207 164 2116.