Finance Bill amendments to curb umbrella company malpractice fail to get traction in UK Parliament

MPs ignore calls for regulation to help contractors


MPs in the UK’s Parliament decided not to select amendments to the 2021 Finance Bill designed to offer contractors protection from rogue umbrella companies accused of skimming off pay and holding back holiday pay.

Last week Conservative MPs David Davis, Sir Iain Duncan Smith, and Andrew Rosindell proposed changes to the UK's 2021 Finance Bill urging the government to introduce legislation to clamp down on intermediary employment firms, which campaigners say have mushroomed as temp agencies and end-user businesses avoid directly hiring contractors judged to fall within the IR35 "off-payroll working" tax law, introduced this year.

James Poyser, CEO of inniAccounts and founder of campaigning website offpayroll.org.uk, said the flood of new contractors into umbrella companies was exacerbating problems with a largely self-regulating system.

But last night in Parliament, politicians determined that the amendments would not put forward to the vote and would not be included in the Bill.

Rebecca Seeley Harris, chair of the Employment Status Forum, together with Poyser, founder of offpayroll.org.uk, who proposed the amendments recently, said in a joint statement:

“It’s disappointing that the amendments tabled were not put forward to a vote, especially after such a compelling debate that recognised the employment rights people lose when they are forced into an umbrella.”

They said further regulation, which would have a more lasting impact on the umbrella industry, was the "only way ahead."

The two campaigners had put forward policy proposals entitled "Umbrella companies - Call for Regulation" to Jesse Norman, the financial secretary to the Treasury, and Paul Scully, the Parliamentary undersecretary of state in the Department for Business, Energy and Industrial Strategy.

Conservative estimate suggests the value of unpaid holiday pay to umbrella company workers in 2016 was at least £1.8bn. It is also estimated that £4.5bn is misappropriated mainly from workers but also from HMRC in the sector of employment agencies and intermediaries, the pair said in their statement.

Speaking in Parliament on Monday, former Conservative leader Iain Duncan Smith, who had suggested changes to the bill, said agency workers had suffered umbrella companies “taking kickbacks, problems over holiday pay and skimming off the assignment rate”.

“Some contractors sign up to use these specific companies believing them to be compliant then discover they're employed by one with a different name, and by a director, say in the Philippines,” he said.

David Davis, former secretary of state for exiting the European Union, pointed out that 48,000 of these companies have been created in the past five years. He said problems in this area had been “proven beyond doubt” by the fact that HMRC had to deregister 22,000 umbrella companies. ®

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