Do your due diligence for new IR35 off-payroll rules urges FCSA CEO

Recruitment agencies are warned to re-examine their preferred supplier lists of umbrella companies and “do your due diligence” as the new IR35 Off-Payroll rules come into force in less than a month, the CEO of the Freelancer and Contractor Services Association (FCSA) has urged.

Speaking to Recruiter, Phil Pluck said the FCSA has recently received “an avalanche of unlawful companies trying to get into our membership” before the new rules around contractors working in the private sector take hold. 

The new rules apply to contractors working with medium or large-sized organisations in the private and third sectors. Under the changes, responsibility for operating the off-payroll working rules will shift from the individual’s personal services company (PSC), to the organisation or business that the individual is supplying their services to. This includes responsibility for deciding whether the rules should apply and deducting the associated employment taxes and National Insurance Contributions.

The FCSA vets umbrella companies to ensure their solutions are legally compliant before admitting them into membership. Pluck said that the average time from applying for membership in the FCSA to acceptance or rejection is three to five months. “That’s how long it takes us to check,” he said.

In the last weeks before the legislation is implemented, Pluck advised that agencies and contractors “just do one more check on Companies House” to see if the company or companies they are working with has “lots of directors or a huge amount of change in the numbers of directors or if a director comes up on numerous umbrella companies. Again, be very careful”. 

Pluck said he had learned last week of an organisation with 69,000 umbrella companies within its system.

“Ask the awkward questions” of umbrella companies trying to secure the contractor’s business or join an agency’s PSL, Pluck urged.

“These people have vast amounts of money, partly because they’re using taxes that should have been paid to HMRC as part of their profits, and that allows them to fund large websites, very slick, and very slick systems that move people around within them without their knowing. 

“So,” he said, “I would just say, agencies and contractors, do your due diligence.”

• Comment below on this story. Or let us know what you think by emailing us at [email protected] or tweet us to tell us your thoughts or share this story with a friend.

FairScore rates umbrellas and highlights ethical companies

Website OffPayroll.org.uk has launched FairScore to see which umbrellas go above and beyond the legal minimums for employment and tax.

25 October 2021

NEW TO THE MARKET: 25-29 OCTOBER 2021

This week’s new launches include: Accept Recruitment, Compass Group, Frontline Recruitment, Harper Fox Partners

New to Market 25 October 2021

SAFERjobs rebrand JobsAware launches today with plea to industry

JobsAware, a non-profit organisation dedicated to highlighting, protecting and championing all worker rights, has launched today, with Keith Rosser (pictured), director of Reed Screening, as chair.

Legislation 6 October 2021

APSCo puts recommendations forward to build back better

The Association of Professional Staffing Companies (APSCo) has outlined its main asks of the upcoming Autumn Budget and Spending Review to help the labour market build back better.

Legislation 30 September 2021
Top