With the changes in IR35 reform just around the corner, more and more Limited Company PSC’s that are deemed as “inside” IR35 will be required to alter their current pay structure and look at either an employed in-house PAYE or outsourced umbrella service. Many agencies run a PSL (Preferred Supplier List) to allow workers a choice of approved/accredited providers without having to search themselves and stumble on a provider that is not necessarily compliant. It is just another level of compliancy that is becoming more and more common in the ever-changing world of RPO (Recruitment Process Outsourcing).
Making sure your provider has been accredited is as much down to the agency as the worker and end client hirer, to ensure that all relevant deductions are taken in accordance with HMRC and the worker is not left with a possible letter from HMRC claiming underpaid taxes, which will inevitably result in these taxes and penalties to land at the door of all or any of these 3 within the supply chain.
Due to these additional stipulations, we are starting to see more and more end clients expressing their concerns and requirements surrounding compliancy and accreditations, making this a hot subject matter and one that needs to be taken seriously.
Done right, a traditional umbrella service is in essence a very “vanilla” solution, the only determining factors as to whom you should use will boil down to the customer service level and margin charged for processing. With many PSL’s this has already been negotiated by the agency and the provider and with more providers on the PSL then there is a very likely chance that the fees could well be slightly higher than on a smaller PSL as payroll providers rely on volume to substantiate the agreed fee.
Agencies have a level of “due diligence” towards the worker and their business, so having a PSL in place helps them restrict any provider that does not meet compliance and accredited requirements. All this will help the worker to be confident that all necessary actions are being taken to ensure the worker is being dealt with in accordance with HMRC guidelines.
A large number of recruitment agencies will only use an accredited provider who has been approved by Professional Passport or FCSA due to the extensive audits carried out on the umbrella to ensure processes and submissions are 100% compliant.
If you do not currently operate a PSL or are in the process of reviewing the providers you currently work with, please contact us as we offer a full compliancy health check with no obligation and advice on how to keep your agency and end clients compliant.
Tel: 01252 863700 | E: info@epayme.co.uk | W: www.epayme.co.uk