Amendments proposed to the Finance Bill which I supported in a bid to “curb or kill” umbrella companies were unfortunately rejected.
I hoped, if accepted by the government, these amendments would stop “aggressive” tax avoidance schemes being introduced and encouraged by some agencies, prevent the exploitation of contractors forced into umbrella schemes which “skim” money from them, and make agencies and clients liable for any malpractice.
Earlier this month, a BBC report that claimed 48,000 “mini-umbrella” companies had been created over the past five years to reduce recruitment agencies’ tax and national insurance liabilities.
There are five points that these amendment would have dealt with which are critical: to stop overnight aggressive tax avoidance schemes introduced and encouraged by some unscrupulous agencies; stop overnight the exploitation of contractors, forced into schemes that adopt malpractice to skim moneys from contractors; stop overnight the kickbacks being used that encourage malpractice; provide sunset clauses to ensure that the sector would have until 6 April 2022 to prepare for the changes; and make agencies and clients liable for any malpractice, thereby removing the incentives to encourage it.
It is disappointing that after much considered and well-presented arguments the government chose to dismiss the issues sought to be addressed by these amendments.
