Umbrella companies can easily market themselves as compliant. However, is it possible for an umbrella company to prove they’re compliant with UK tax law? In this article, we address umbrella company compliance and highlight the warning signs of non-compliant payroll providers (and the severe issues they can cause for the entire supply chain).

SafeRec allows umbrella companies to provide a new level of transparency

While fairly new to the sector, SafeRec is already transforming compliance in the contractor payroll sector. Powered by AI software, SafeRec uses real-time information to audit payslips produced by umbrella companies for employees. These audits are available to the entire supply chain, which is extremely valuable for recruitment agencies dedicated to compliance. They can check that their candidates are being paid compliantly, protecting both the agency and the worker.

We asked Sebastien Sauca, CEO and founder of SafeRec, some questions about the revolutionary SafeRec software. Regarding compliance, Seb explains how SafeRec allows umbrella companies to prove they operate compliantly.

“SafeRec’s real-time auditing technology ensures transparency at every step”

“When a recruitment agency partners with a SafeRec-certified umbrella company, they automatically receive monthly audit reports as proof of full compliance. This report verifies that the agency’s workers’ payslips have been audited, taxes have been calculated correctly, and—critically — those taxes have been properly disclosed and paid to HMRC.

SafeRec’s real-time auditing technology ensures transparency at every step, giving agencies confidence that their workers’ tax obligations are being met without risk of non-compliance (mini Umbrella Company, Accounting Acquisition, etc). This level of assurance is unmatched in the umbrella market and crucial for protecting agencies from tax liabilities”

SafeRec “strengthens your agency’s reputation”

Seb also explains the advantages that recruitment agencies have access to when partnering with a SafeRec certified umbrella company.

“Partnering with a SafeRec-certified umbrella company offers recruitment agencies a host of unique advantages. First and foremost, you gain complete transparency and peace of mind through monthly audit reports, which verify that your workers’ payslips have been independently audited, taxes have been correctly calculated, disclosed to HMRC, and paid on time. This level of compliance assurance protects your agency from potential legal or financial risks linked to non-compliant umbrella companies.

Additionally, your agency will have access to a comprehensive 30-50 page due diligence report, available at no cost on saferec.co.uk, which is conducted by a law firm on the SafeRec-certified umbrella company. SafeRec also simplifies the compliance-checking process, reducing the administrative burden on your team. You can focus on growing your business, knowing your umbrella partners are fully compliant.

This not only strengthens your agency’s reputation but also provides a competitive sales advantage. Both the due diligence report and the monthly audit report can be shared with end clients, allowing you to demonstrate full tax compliance across the entire supply chain, further boosting your credibility.”

FCSA accreditation shows a commitment to compliance

The Freelancer and Contractor Services Association (FCSA) is the UK’s leading self-regularly body dedicated to ensuring the supply chain of temporary workers complies with HMRC’s rules and regulations. To become an accredited member, umbrella companies must undergo a series of assessments and audits to ensure that every process adhere to the FCSA’s publicly available Codes of Compliance (click here).

Once an umbrella earns FCSA membership, they must undergo annual audits and assessments by independent tax professionals and lawyers in the UK to ensure they continue to abide by the highest compliance standards. Churchill Knight Umbrella became FCSA accredited in 2020 and has successfully passed every annual audit to date.

The number of recruitment agencies exclusively referring to umbrella companies with FCSA accreditation is rising. If you have a Preferred Supplier List (PSL) consisting of umbrella companies without reputable accreditations, we highly recommend you consider exclusively referring to FCSA members.

How does a typical non-compliant umbrella company (tax avoidance scheme) operate?

Despite the government releasing multiple pieces of online material to help temporary workers and supply chain members identify non-compliant umbrella companies, there are still plenty targeting contractors, freelancers and staffing agencies.

It’s not just the workers who engage with non-compliant umbrella companies who face life-changing tax bills from the government. Recruitment agencies that refer to non-compliant umbrella companies (tax avoidance schemes) face severe tax bills from HMRC as they actively target organisations that facilitate tax avoidance.

Non-compliant umbrella companies operate in many ways, but here are some of the warning signs that a payroll provider may not comply with UK tax laws:

  • They’re located outside of the UK.
  • They promote inflated take-home pay potential (sometimes upwards of 90% – a clear indication that the correct amount of tax and National Insurance is not being deducted to a worker’s pay).
  • They have not traded for long.
  • They are backed by directors with no history within the industry.
  • They claim to help workers get paid “outside IR35” and promote themselves as helping workers “pay less tax”.
  • They process payments in unusual ways, including shares, loans, credit agreements, job board credits, and more.
  • They are not accredited by a reputable body such as the FCSA, Professional Passport or SafeRec.
  • They do not have many legitimate reviews on leading platforms including Google and Trustpilot.
  • They have a plain website without much information about umbrella payroll, PAYE and compliance-related topics.

We can prove we operate compliantly

Churchill Knight Umbrella is compliant, but unlike most umbrella companies, we can prove it!

By becoming a SafeRec certified umbrella company, our employees and partners have access to real-time payslip audit reports which will confirm that all taxes have been paid correctly to HMRC and that no signs of malpractice or deceit have occurred.

To discover more about our compliance-driven umbrella payroll service, please contact our dedicated Agency Support Department on 0808 2525533, or email agency@churchill-knight.co.uk.

As SafeRec is relatively new to the industry, our team would be happy to arrange a demonstration of how the software works and how it’ll directly benefit your business operations.

We go the extra mile to support you and your candidates

We’re always looking to go the extra mile for our partnered agencies. When you add Churchill Knight Umbrella, you can benefit from:

Account Manager (no need to call the switchboard)

Referring to us is extremely easy and you’ll be assigned your own Account Manager to ensure it’s always easy to get hold of us and ask questions (and make referrals).

Co-branded materials

Our Marketing Team will be delighted to create co-branded materials to help streamline your processes, and to make it easier than ever before for your candidates to register with us. For example, we can build a dedicated co-branded landing page for you to share with your candidates (churchill-knight.co.uk/your-agency/), outlining how our service works, how to interpret payslips and deductions, how to register, and the benefits available to them as an employee of ours.

Automated Key Information Documents (KID)

We’ve automated Key Information Documents! Our new process allows you to request and download them in under one minute.

SafeRec and FCSA

As a partnered agency, you can receive monthly reports showing every payslip we’ve processed for your candidates and proof we’ve operated compliantly (as summarised earlier in this article as part of our SafeRec certification). We’re also proud to be an accredited member of the Freelancer and Contractor Services Association (FCSA), and all our processes abide by the FCSA’s Codes of Compliance.

Competitions

We appreciate every agency we work with and regularly organise competitions and giveaways. This is our way of saying thank you. For example, we recently ran LinkedIn promotions with fantastic prizes, including two tickets to the Antony Joshua vs Daniel Dubois fight at Wembley.

Brilliant online reviews

Not a direct benefit, as such. However, when you partner with us, you’re teaming up with an umbrella company with exceptional online reviews – allowing you to make referrals with complete peace of mind. At the time of publishing this article, we’re rated 4.8/5.0 on Trustpilot and 4.4/5.0 on Google.

Download the new Churchill Knight Umbrella poster

We’ve created a new poster which summarises the benefits of referring to a SafeRec certified umbrella company, and it’s available to view and download here.

In addition to our online Recruiters Zone (full of helpful information for recruitment professionals), we have plenty of up-to-date marketing materials explaining more about Churchill Knight Umbrella, our accreditations, and the many benefits of adding us to your agency’s Preferred Supplier List (PSL). Please contact us today to request more information.

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