Contractors at risk of being taken in by bogus badges from 'sham' accreditation outfits

Contractors must start double-checking the badges that umbrella companies display on their website, experts are appealing to readers of ContractorUK.

The advice to check that the provider’s badge is a stamp of approval from a genuine, verifiable accreditation body featured in a new umbrella company checklist for contractors.

But an avoidance scheme blacklisted by HMRC – Peak PAYE Ltd -- has since been observed using a badge emblazoned with ‘The Institute of Freelancing & Contracting Professionals.’

The institute describes itself as: “The UK’s most prominent professional membership association; promoting compliance, maintaining standards, and certifying the UK’s leading umbrella companies, contractor accountants, and payroll providers for freelancing contractor professionals.”

‘Accreditation from unverified parties’

But established in 1999 and a visible lobbyist against IR35 ever since, the Association of Independent Professionals and the Self-Employed has never heard of the institute.

“IPSE has not been previously aware of ‘IFCP’ and is not therefore in position to verify its legitimacy, or otherwise,” says a cautious Andy Chamberlain, IPSE’s policy director.

He further told ContractorUK: “We…advise contractors to take great care when choosing a provider. We would also add that contractors should be wary of any claims of accreditation from unverified parties.”

‘Unconvincing attempt to provide a veil of legitimacy’

Attempts to verify the institute’s legitimacy are complicated by the institute itself however, as it also calls itself, ‘The Society for Professional Freelance Contractors and their Associates.’

Its website has a third name, ‘Independent of Freelancing and Contracting Professionals,’ and a fourth (minus the “of ” blooper), ‘Independent Freelancing and Contracting Professionals.’

A long-standing adviser to the self-employed has heard enough.

“This is fairly obviously a very unconvincing attempt to provide a veil of legitimacy to at least one non-compliant operator,” said the adviser.

‘Sham organisation’

Declining to be named the adviser added: “I [have been advising the self-employed for 12 years] and don’t know of anyone who works [at the IFCP].

“And as far as I can [see]…no evidence of them [exists] on Companies House, and even their ‘links’ to their Twitter and LinkedIn profiles don’t actually take you anywhere. It’s a sham organisation – so contractors beware.”

Also having tried to run some checks on the IFCP is WTT Consulting – an HMRC dispute advisory recommended in last week’s umbrella company checklist as a bonafide assessor.

‘Paper-thin entity’

The advisory’s tax director Graham Webber described the ‘organisation’ to ContractorUK last night as a “paper-thin entity” appearing to have “little or no substance.”

Lucy Smith, managing director of Clarity Umbrella agrees.

“When a contractor looks at a website and there is very little information available on the site, it [should] lead [them] to question why.”

‘Question what they have to hide’

Referring to Peak PAYE Ltd but applying equally to the IFCP, Ms Smith continued: “The website is very bare, says very little and would lead me to question what they have to hide.

“If a….[provider] has nothing to hide then they should have no issues in explaining it all via the website.”

But equally, an abundance of explanations or claims, particularly those like the ones made on the institute’s website, can verge on the comical -- or they would do if the risks to contractors of being hoodwinked were not quite as grave as they are.

‘Etc, etc’

Recruitment lawyer Adrian Marlowe of Lawspeed explained: “Peak PAYE [being outed] by HMRC is highly topical as tax avoidance [is] very much back on the agenda [at HMRC].

“But Peak PAYE’s website shows it is accredited by an outfit called the Institute of Freelance Contractor Professionals which claims to be [lots of good-sounding things] like ‘independently audited’,  and ‘fully disclosed to HMRC.’ Etc. Etc. Someone clearly has a sense of humour.”

Neither Peak PAYE Ltd nor the Institute of Freelancing and Contracting Professionals responded to questions or written requests for comment.