CIS Contractors

Good News for Umbrella Companies

4 February 2015

Recruitment International have reported that The Government have recognised the value of responsible Umbrella Companies. Below is the relevant extract from Parliament’s Question and Answers section:

Guto Bebb: To ask Mr Chancellor of the Exchequer, what steps his Department is taking to stop agencies using umbrella companies to manage the payroll function of companies within the construction industry.

Mr David Gauke: Umbrella companies have been a part of the UK labour market for many years and, when operated responsibly, provide a useful conduit through which payments, including tax, can be made. As such, Her Majesty’s Revenue and Customs (HMRC) are not taking steps to stop agencies using umbrella companies to manage the payroll function of companies within the construction industry.

The Construction Industry was affected when new false self-employment rules meant a large number of Construction Workers could no longer benefit from the Construction Industry Scheme (CIS).

The full article is available at: http://www.recruitment-international.co.uk/news/financial-secretary-recognises-role-of-responsible-umbrella-companies-25668.htm

Guto Bebb also went on to ask on the progress of the review into Umbrella Companies (into Travel and Subsistence):

Guto Bebb:  To ask Mr Chancellor of the Exchequer, with reference to Chapter 2.147 of the Autumn Statement 2014 (a) who is handling the review on umbrella companies, (b) who is being consulted and (c) what progress has been made with the consultation to date.

Guto Bebb:  To ask Mr Chancellor of the Exchequer, what progress his Department is making on preventing companies from deducting both employer and employee National Insurance contributions from their employees' pay packets.

Mr David Gauke: HM Revenue and Customs (HMRC) and HM Treasury are handling the review on the use of overarching contracts of employment by employment intermediaries, including umbrella companies, in the temporary labour market. Officials have met with over 70 interested organisations from a number of sectors. The discussion paper closes on 10 February 2015.

The question ignores the fact that the rate paid to Umbrella Companies reflects any deductions that the Umbrella Company will make in calculating an Umbrella Company workers pay and commission.

The full Parliamentary question and answers are available at: http://qnadailyreport.blob.core.windows.net/qnadailyreportxml/Written-Questions-Answers-Statements-Daily-Report-Commons-2015-02-02.pdf