Contracting Matters

It’s not surprising that with the advent of AWR that many “umbrella companies” have come out with fresh claims of HMRC approval, compliance and uniqueness. Being “compliant” is a corner stone of the professional umbrella business but it can also be very confusing for the contractor and Agency to really understand what that means.

The first and main point is that there is no such thing as a rubber stamp or approval made by HMRC. Doesn’t exist. Many choose to use a third party or a routine HMRC review is carried out, to then leverage that as “approval”, often claiming that they are the only business to have received same. It’s nonsense. As a consequence of running a PAYE scheme any business will be potentially looked at and reviewed by HMRC. Clearly if you have a fair few employees and make decent tax returns, HMRC will want to make sure all is in order. These are normal procedures and have been in place for many many years.

Let’s look at the independent compliance space next. In the life of the Parasol Umbrella brand we have undertaken and passed 12 compliance reviews, 7 of which were with different bodies. I could therefore proudly claim to be the only business in the UK to have passed 12 reviews and yes that’s a measure of comfort that we’ve been doing the right thing for a long time but the very volume creates some questions. Some compliance organisations are commercial bodies and can’t therefore in my opinion, be truly independent as the need to hold reviews helps drive commercial return. Others are provided off the back of associations and others are simply provided under the instruction of the independent business to prove that all is in order. Much of this is perfectly acceptable but inevitably offers a variety of assurance based on cost, expertise and objective of entering into the process.  I have seen far too many organisations use cost as a reason to not fully embrace a detailed process. In relative terms this is not expensive and you have to wonder when same organisations spend much more on marketing and questionable ethics around attracting business.

It will be no surprise that I nail my and our colours to the Freelancer and Contractor Services Association mast. We helped found it and we did so because it’s independent, not for profit and allowed us to engage properly with the key stakeholders to understand what they wanted to see in “compliance”. I will not apologise for also stating that the code of conduct and review process is very tough and the results of the same are then shared with HMRC. We still don’t say however that we are HMRC compliant but we have nothing to hide. Being compliant is also so much more than being able to prove that expense claims are managed properly (which is important). It goes to the very heart of how a business operates, the ethics, the future outlook for that business and it’s ability to deliver a compliant solution on a professional basis. Being able to adhere to that is not easy but doing the right thing rarely is.

Perhaps some of my peers consider the FCSA to be a bit elite and expensive. It’s relatively expensive because using an independent partner from a big 4 accountancy practice with expertise and knowledge in our sector is not cheap. The time needed to undertake the offsite review and then proving that was is written is evidenced on site and thoroughly, also requires effort. All that said, when compared with spend on web banners, marketing and incentives it’s small beer. I am often then left wondering as to why an organisation would not want to prove it truly meets the highest standards. On the subject of being elite – I consider that be a bit of an excuse. The code of conduct has been made public since inception and we have even seen some “independents” borrow parts to use in their own processes. We have nothing to hide and there is no agenda, anyone is free to apply and complete the process.

I know I’ve made a circular argument having started out criticising the “compliance” misuse and then pushing FCSA but I believe in the independence, openness and depth of that approach. I challenge others to really take compliance seriously and not simply an opportunity to make a marketing statement.