Umbrella Company Compliance

Does your Umbrella Company provider tick all the right boxes?

HMRC have dramatically increased their compliance activity in respect of Umbrella companies in recent months and many of the larger companies have now been the subject of an inspection or audit visit - something that we welcome and embrace. It is perhaps worth passing on some of the key points that HMRC are focusing upon in order to ensure that your agency, which is currently unaffected by debt transfer rules, doesn't get embroiled in a situation where "abuse of the expenses regime" or the "rail-roading" of your contractors to use a specific umbrella means that this situation potentially changes.

Key points to consider before appointing an Umbrella service provider to your PSL include:

  • Has an overarching contract of employment been issued to every umbrella company employee and has a signed copy been retained by the Umbrella Company? Are the key points of recent HMRC compliance visits included? Does it state the full employment rights of the individual? Does your agency have a copy of the contract on file?
  • Bar 2010 and Bar 2080 have recently had our contracts reviewed and revised and we take stringent measures to ensure that a signed copy of our overarching contract of employment is in place for everyone who registers through the Bar 2 Umbrella. The contract includes all the points raised in recent HMRC inspections and is probably the most robust contract in the industry. Copies can be downloaded via our website at http://www.bar2.co.uk.
  • Does your umbrella company service provider retain copies of photo ID and right to work and thereby comply fully with Border Agency requirements and immigration law?
  • Bar 2010 and Bar 2080 insist that copies of photo ID and all necessary visa / right to work documentation is held on record for every employee and we will not process payments if an individual fails to provide the necessary documentation within a reasonable period of time.
  • Are holiday pay, Statutory Sick Pay and Statutory Maternity or Paternity Pay and other statutory payments processed by your umbrella provider?
  • All Bar 2010 and Bar 2080 Umbrella Company employees are entitled to full statutory employment rights and we process all of the above and can demonstrate that correct payments are made in every case.
  • Does your Umbrella Company service provider have a dispensation for expenses issued by HMRC? Is it current or have any of the dispensations been revoked? The first steps HMRC would take with a non-compliant umbrella is to revoke their dispensation.
  • Bar 2010 and Bar 2080 processes all expenses claims in strict accordance with the dispensation granted to us by HMRC (first issued in 2002 and last renewed in March 2009). We insist that all expenses claimed are fully supported by receipts and will not permit any unsubstantiated "round sum" allowances. All receipts are retained and we randomly check a percentage of claims every week to ensure that only genuine and substantiated claims are processed. 
  • With travel and subsistence claims, are correct mileage rates being applied? How are temporary workplaces classified? What information is held about employee's vehicles? Is there a clear expenses policy?
  • Bar 2010 and Bar 2080 keep a detailed log of all mileage claims and will always advise an employee when they approach the 10,000 miles annual threshold. Mileage claims will be processed at the appropriate rate based on whether or not receipts are provided. We will randomly check mileage claims to verify that the distance claimed is accurate and that an individual was indeed working at the location indicated. Everyone is informed of the limitations of the "2 year rule" and we do monitor and record the length of time that someone claims travel expenses to ensure this is not breached. We ask for vehicle make, model and registration details on every claim form and in addition will request copies of V5 documents at random in order to verify ownership of the vehicle. We have a clear and defined expenses policy and this is issued to everyone when they join the Bar 2 Umbrella. Copies are available on our website http://www.bar2.co.uk/.

The Operating Companies have been trading for nearly 12 years during which time we have strived to provide the recruitment industry with a compliant service with a strong focus on our customers. Should you wish to meet and discuss any of the above in more detail, please do not hesitate to contact me directly.

Or Email Customer Service: enquiries@Bar2.co.uk
Tel: 0845 838 1641*
*Calls are recorded for training purposes