A question for all Agencies that use Payroll Providers/Umbrella Co. etc. to payroll their workers – Would you want your workers to be contacted DIRECTLY by the Payroll Provider that you outsource to? The answer would be along these lines…. technically they could do, because under the workers overarching contract of employment that they have with the Umbrella, the Umbrella is their Employer, however, by contacting your workers directly and offering them such solutions post April 2016, this could end up with YOUR clients, and, or, workers deciding to cut out the middle man, in this instance YOU THE AGENCY, to go direct to the end client – YOUR CLIENT.
If this were to happen, then YOU the agency would not only lose your ‘flexible’ workforce to your end clients but also lose out on the already tightening margins that we will see post April 2016.
Please be aware of such providers that have been suggesting they will be contacting their ‘employees’ and offering them solutions with a fixed 5% expense allowance. Remember, for business expenses to be claimed a cost must have been incurred and post April 2016, receipts must be evidenced as proof of such incurred costs when completing your Self-Assessment at Tax Year End.
If your provider is offering your workers a fixed amount of 5% expense allowance and they do not have the relevant level of receipts to evidence this, then, as the contractor, it is they themselves, that will be liable for any short fall, as this % incurred could be a lot lower, leaving them with an amount of tax liability come Tax year end.
As well as the potential RISK of any such shortfall, leading to a degree of Tax liability, there is also the loss of your workers employment rights to consider, i.e. – NO STATUTORY PAYMENTS (SMP/SSP/SPP/WTD).
There is no such thing as ‘RISK FREE’ but there is such a thing as ‘HIGH RISK’………..do you want to take that RISK and let your Payroll Provider talk directly to your workforce. Perhaps the answer here, should be NO?
Neil Baigent
Compliance Manager
ePayMe