HMRC Call for Evidence - Umbrella Companies'

07 December 2021      Julia Ascott, Employment Taxes Specialist

HMRC have published Call for Evidence: Umbrella Companies to invite views from stakeholders on the role that umbrella companies play in the labour market, and how they interact with the tax and employment rights systems. It sets out the concerns that have been raised by some stakeholders, as well as government action already taken to tackle tax non-compliance and improve protection for workers.

The Call for Evidence “invites views on a broad range of questions regarding the role that umbrella companies play and their utility in the labour market, as well as the ways in which they interact with the employment tax and employment rights systems. It also seeks views on the government’s understanding of the behaviours in the market that are causing concern.”

For BUFDG to respond to the call for evidence, we would be grateful for your input and have reproduced those questions relating directly to HEIs below.  If you would like to be involved in this process, please provide your comments to

Questions for employment businesses and end clients about their use of umbrella companies

  • Question 1: Do you represent an employment business, or end-client?
  • Question 2: In which sector does your business operate, or what type of service does it provide?
  • Question 3: Roughly how many people does your organisation employ directly and operate PAYE for overall? [micro (0-9 employees), small (10-49), medium (50-249) and large (250+)]
  • Question 4: If you use umbrella companies, roughly how many people are employed via an umbrella company on behalf of your business each year?
  • Question 5: What factors do you take into account when deciding how to engage staff?
  • Question 6: If you use umbrella companies, why do you work with them?
  • Question 7: If you use umbrella companies, does working with them create any advantages? If so, what are they?
  • Question 8: Does working with umbrella companies create any disadvantages? If so, what are they?
  • Question 9: Have you noticed any change in the way umbrella companies market themselves and the benefits they offer over the last 5 years? What has changed?
  • Question 10: Have you considered working with other intermediaries, such as payroll bureaux? If yes, which other intermediaries? If yes, why did you decide not to work with them or why did you choose to work with an umbrella company over these other intermediaries?
  • Question 11: The government has heard concerns about supply chains for about becoming longer. Do you have views on the benefits and drawbacks of longer supply chains and/or why businesses may find that useful?
  • Question 12: Do you encourage or require your work-seekers to work through an umbrella company? Why? What type of workers?
  • Question 13: Do you operate a preferred supplier list? If yes, how many do you use? If yes, how do you select these? If yes, why do you use a preferred supplier list?
  • Question 14: Do you do carry out due diligence on umbrella companies you work with/on your preferred supplier list? How?
  • Question 15: What proportion of umbrella companies that you work with are accredited by a third-party trade body and which trade body?
  • Question 16: Do you receive all the required information from the umbrella company to accurately complete the Key Information Document? Do you independently validate the information received from the umbrella company? How?

  • Question 34: If you are an employment business or end client which uses umbrella company employees, do you take any steps to prevent umbrella companies which may engage in tax non-compliance from entering your labour supply chains? If so, what?
  • Question 35: How could employment businesses or end clients, who use umbrella companies, do more to ensure tax compliance in their supply chain?
  • Question 36: Do you have experience of umbrella companies engaging in any related schemes or models to those covered above, or any other tax noncompliance not covered in this paper? If so, what are they?
  • Question 37: How could the government support or encourage employment businesses and end clients to do more to ensure tax compliance in their supply chain?

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