Correctly structured, well-managed service providers and staffing agencies have nothing to fear from an HM Revenue & Customs (HMRC) clampdown, according to the chief executive of umbrella company Parasol.

Rob Crossland told Recruiter: “With regards to any ‘clampdown’, HMRC are basically enforcing their existing rules and when it comes to expenses such as travel and subsistence, which we have all been aware of for some time, most umbrella companies and other service providers are well placed to help their contractors recoup what they are entitled to and ensure they are operating compliantly.

“The only businesses that may suffer as a result of HMRC scrutiny perhaps had something to hide in the first place and have no place in an industry that should be based on transparency, full employment rights and the highest levels of compliance.

“One point that hasn’t been considered is the practise of paying expenses as part of the national minimum wage (NMW). This is something that is under review by HMRC and anyone who is operating in this way and paying contractors less than NMW could see a massive impact on their business.”

Crossland also downplayed the impact of any potential increase in VAT that could be announced in next week’s emergency Budget. “Businesses that have robust internal procedures and credit control should not have an issue with cash flow due to any VAT increase,” he said.