In a bid to provide greater reassurance for umbrella employees, industry experts All Umbrella Companies Are Equal (AUCAE) have recently published a manual describing what constitutes a 'compliant' umbrella company, Contractor Eye reports.
The organisation stated that bad practice within the industry remains, and has spent the last year creating a manual with guidance from the HMRC. The manual will be given to the group's 36 member companies, and it is hoped that it will create a 'level playing field' for providers.
Contractor Eye spoke to Lisa Keeble, co-founder and managing director of AUCAE, to discuss why there has not been an official guide to the definition of a complaint umbrella scheme until now:
"HMRC guidance for umbrella companies is non-specific for the most part and extremely fragmented unless you know what you're looking for and how to piece the information together they are less than helpful," she explained.
After advising HMRC that more specific guidelines were needed, the group took on the task themselves and composed a compliance manual which could then be reviewed and edited by HMRC.
The manual itself deals with issues ranging from the requirements needed for a contractor to be fully 'over-arching', to the assertion that no UK PAYE umbrella company should be using 'Rolled Up Holiday Pay'.
Unfortunately, despite exposure in the media and HMRC's clampdowns, Keeble noted that there were many dishonest schemes still in operation. These include those that push tax avoidance schemes, or that "promise excessive rewards and referrals, which could have massive financial impacts for any recruiter recommending them and any contractor using them."
With AUCAE's membership now accounting for 30% of the umbrella market, the manual should have a positive effect. When asked what would happen to members who did not adhere to the manual's terms, Keeble stated that:
"The compliance manual was designed to expand on the original charter that all members of AUCAE have promised to abide by; if we are notified that any member is not acting compliantly they understand that they will be required to respond publicly – hence why we refer to members as 'straight talking'."