HMRC, Department for Business and Trade and HM Treasury recognise the harm umbrella company non-compliance causes to workers, legitimate businesses, and the tax system and that is why government recently consulted on potential approaches to bringing umbrella companies within the scope of government regulation and options to tackle tax non-compliance in the sector.

While the government is considering the responses received to the consultation and will update in due course, it also continues to take action to improve the way the umbrella company market works. So, it is publishing new guidance today for employment businesses and updated guidance for umbrella company workers.

New guidance for employment businesses who use umbrella companies to employ workers is intended to help employment businesses understand their legal responsibilities, protect their business from bad actors and support umbrella company workers in their supply chains. Reading the guidance could help employment businesses reduce their risk of non-compliance. You can view the new guidance here: https://www.gov.uk/guidance/responsibilities-for-employment-businesses-working-with-umbrella-companies.

Guidance for umbrella company workers is intended to help workers understand how they will be engaged, how their pay is made up and what employment rights and tax obligations they have when employed by an umbrella company. The guidance has been updated to include advice on how workers can protect themselves from the actions of fraudulent umbrella companies. You can view the updated guidance here:  https://www.gov.uk/guidance/working-through-an-umbrella-company. 

Both sets of guidance have been developed by HMRC and Department for Business and Trade as part of a wider programme to tackle non-compliance in the umbrella company market. Input from external subject matter experts as well as feedback from user testing also informed the new guidance page for employment businesses.

If you have any further questions or things you would like to discuss please contact Abi Adamson (abi.adamson@hmrc.gov.uk) and Rebecca Parr (rebecca.parr@hmrc.gov.uk).