HMRC rules out publishing standards for umbrella companies

Umbrella company contractors shouldn’t expect anything new from the taxman on compliance.

In speaking to the IR35 Forum, tax officers said that because non-compliance by umbrella companies was “largely deliberate”, publishing some best-practice standards “would be ineffective.”

The Revenue’s decision not to issue anything new on brolly compliance is despite calls to the contrary by the forum, which said putting standards in writing would help.

But having consulted with the business department, which HMRC told the forum ‘regulates agencies,’ it is also “unlikely” that publishing some standards would help individuals either.

The taxman’s thinking is that if people are unwittingly using non-compliant intermediaries, they are equally likely to be unaware of published standards -- if they were published.

The response from the IR35 Forum, which met in August according to minutes published yesterday, seems accepting, yet mainly because HMRC produced Spotlight 45 instead.

“[This document] covers the issue…[and] confirm[s] that HMRC will continue to robustly tackle non-compliance by employment intermediaries,” the Revenue said.

Members of the forum confirmed that Spotlight 45 had raised the issue, and HMRC said it would send it to all members, including to the FCSA, who was absent from the meeting but which has since expressed some reservations about its contents.

The lack of further action by HMRC is likely to be seen by some as a missed opportunity, in light of the department acknowledging (but not detailing) that public sector IR35 reforms have led to the emergence of new avoidance schemes, often purporting to be umbrellas.