Category: Legislation

From April 2026, major changes to UK tax legislation will significantly increase the level of risk faced by organisations engaging contractors through umbrella companies. 

While umbrella employment remains a legitimate model, the new joint and several liability provisions mean that responsibility for PAYE compliance may extend across multiple parties in the labour supply chain, including agencies, MSPs and, in certain structures, end clients.

For organisations that rely on contractors, the reform goes beyond payroll mechanics and brings greater focus to governance and compliance within labour supply chains.

Source: PAYE Rules For Labour Supply Chains That Include Umbrella Companies  

Why Is the Government Reforming Umbrella Companies? 

Why Is the Government Reforming Umbrella Companies? 

HMRC has spent several years investigating widespread non-compliance within parts of the umbrella company market. 

Historically, some umbrella providers operated disguised remuneration schemes, using artificial loan or advance arrangements to inflate contractor take-home pay while avoiding PAYE and National Insurance. In some cases, contractors were receiving up to 90% of their pay while little or no tax was remitted. 

HMRC estimates that hundreds of millions of pounds in unpaid tax have been lost through these practices since the early 2000s. As a result, umbrella companies have become a major enforcement focus for the government. 

Following a series of consultations beginning in 2022, HMRC concluded that existing rules were insufficient to prevent non-compliance or protect workers and supply chains. 

Source: Tackling non-compliance in the umbrella company market – GOV.UK 

What Is Changing in April 2026? 

The new legislation, introduced under Chapter 11 of ITEPA 2003, brings in joint and several liability across labour supply chains that use umbrella companies. 

In practical terms, this means: 

  • If PAYE tax is unpaid, HMRC can recover the full amount from more than one party 
  • HMRC does not need to pursue the umbrella company first 
  • Multiple parties can be pursued at the same time 
  • Liability applies regardless of intent or awareness 

Crucially, the legislation also removes the long-standing statutory defence based on due diligence. 

Source: PAYE rules for labour supply chains that include umbrella companies from 6 April 2026 – GOV.UK 

Who Can Be Liable Under the New Rules? 

Depending on how a supply chain is structured, liability may sit with: 

  • Umbrella companies 
  • Recruitment agencies supplying workers 
  • Managed Service Providers (MSPs) 
  • End clients, where there is no agency in the supply chain 

Under the new rules, the agencies or clients who have contractual relationships with the worker become responsible for PAYE compliance if an umbrella company does not meet its obligations. 

The rules apply to umbrella-employed workers only. They do not apply to: 

  • Limited company contractors operating legitimately outside IR35 
  • CIS-only engagements 

Source: PAYE rules for labour supply chains that include umbrella companies from 6 April 2026 – GOV.UK

Supply Chain Risks

Key Supply Chain Risk Scenarios for Clients 

Agency + Umbrella Model 

Where an agency engages a worker through an umbrella company, HMRC may hold the agency liable for any underpayment of tax if the umbrella company fails to operate PAYE correctly. 

Source: PAYE rules for labour supply chains that include umbrella companies from 6 April 2026 – GOV.UK 

MSP in the Supply Chain 

Where an MSP sits between the agency and the client: 

  • Liability typically transfers from the agency to the MSP 
  • This is why MSPs are introducing increasingly strict umbrella PSLs 
  • MSPs managing thousands of contractors face significant aggregated risk if even one umbrella fails. 

Agency or MSP Ownership of an Umbrella 

Where an agency or MSP: 

  • Owns an umbrella company, or 
  • Has a material interest (5% or more) in an umbrella 
  • Liability can shift directly to the end client. 

In many cases, clients are unaware that such ownership structures exist within their supply chain, creating hidden exposure. 

Why Due Diligence Alone Is No Longer Enough 

Why Due Diligence Alone Is No Longer Enough 

Guidance from gov.uk makes clear that entities responsible for engaging umbrella companies should carry out realistic and regular checks to ensure compliance. This includes understanding how contractors are paid and monitoring for signs of avoidance or irregular payroll practices.  

Source: Responsibilities for employment businesses working with umbrella companies – GOV.UK 

Under previous rules, demonstrating reasonable due diligence could offer protection. From April 2026: 

  • Statutory defence is removed 
  • Liability exists even where checks were completed 
  • HMRC expects organisations to “know who they are working with” 
  • This means ongoing, real-time monitoring and tighter supply chain control are now essential as proactive risk management. 

Why PSLs Are Tightening Across the Market 

With liability now extending to agencies and clients, many organisations are simplifying their supply chains by enforcing Preferred Supplier Lists (PSLs) of audited, compliant umbrella partners. These lists reduce complexity and make ongoing compliance monitoring easier for all parties involved. 

A streamlined PSL also helps protect: 

  • Clients from unexpected liability 
  • Contractors from non-compliant payment structures 
  • Agencies and MSPs from exposure to HMRC enforcement 
What Good Risk Management Looks Like in 2026 

What Good Risk Management Looks Like in 2026 

Best practice includes: 

  • Conducting robust supply chain mapping and due diligence 
  • Restricting umbrella partnerships to audited and financially stable providers 
  • Using real-time payroll monitoring platforms 
  • Documenting supply chain governance processes 

GOV.UK guidance specifically encourages organisations to structure supply chains simply to reduce compliance risks 

Source: Responsibilities for employment businesses working with umbrella companies – GOV.UK 

How Advance TRS Supports Clients 

Advance TRS has already adapted its supply chain approach to align with the April 2026 reforms. We: 

  • Work exclusively with 3 compliant, accredited umbrella partners 
  • Support structured PSL frameworks for clients and MSPs 
  • Educate consultants and hiring managers on risk and mitigation 
  • Provide transparent reporting and governance documentation 

This approach is designed to protect clients from financial risk while maintaining market agility and contractor experience. 

Final Thought 

The April 2026 umbrella reforms signal a major shift in accountability. Clients who act early to tighten supply chains, strengthen governance, and work with informed partners like Advance TRS will be best placed to reduce financial and reputational risk. 

Talk to Our Team About Managing Umbrella Risk 

Talk to Our Team About Managing Umbrella Risk 

The April 2026 umbrella reforms represent a fundamental shift in how risk is managed across labour supply chains. For clients, this isn’t just a compliance exercise; it’s about protecting your organisation from financial exposure, governance issues and reputational risk. 

At Advance TRS, we work closely with clients, agencies and MSPs to: 

  • Review and simplify labour supply chains 
  • Implement and manage robust, compliant PSL frameworks 
  • Ensure umbrella partners meet strict compliance and financial stability standards 
  • Support governance, audit and procurement requirements 
  • Clearly communicate changes across the supply chain 

If you would like to understand how these changes affect your organisation, or want support reviewing your current approach, our team is here to help you manage risk with confidence. 

Speak to the Advance TRS team to understand how we can support your contractor workforce strategy ahead of April 2026. 

Frequently Asked Questions (FAQs) 

What is the umbrella company tax reform coming in April 2026? 

It’s a change that makes agencies and end clients responsible for ensuring that PAYE and National Insurance are correctly accounted for when workers are supplied through umbrella companies. Source:  

Why are end clients at risk under the new legislation? 

When there’s no agency involved, end clients become responsible for ensuring PAYE compliance, and HMRC can pursue unpaid tax from them if an umbrella fails to remit.  

Does this apply to all contractors? 

No, it only applies to workers employed through umbrella companies. Limited company contractors and CIS-only engagements are outside this scope.  

What does joint and several liability mean in practice? 

It means HMRC can recover the full amount of unpaid PAYE from any party in the supply chain, regardless of fault.  

Is due diligence still enough to protect clients? 

Due diligence must be part of your process, but it does not remove liability; governance and ongoing monitoring are essential.  

Why are PSLs tightening? 

Because agencies and MSPs need to demonstrate that they control supply chain risk,  and that they only work with umbrellas that operate PAYE correctly.  

What happens if an umbrella company becomes insolvent? 

Tax liability does not disappear; clients may still be pursued if the umbrella fails to meet its tax responsibilities.  

How should clients manage risk now? 

Clients should map their labour supply chains, verify umbrella ownership structures, enforce strict PSLs, and adopt real-time compliance checks.  

What Contractors Need to Know Before April 2026

From April 2026, changes to UK tax legislation will affect how contractors working through umbrella companies are paid and managed within labour supply chains. 

While umbrella employment remains a legitimate and widely used way of working — particularly for inside IR35 roles, new rules mean that agencies and end clients will be far more selective about which umbrella companies they allow contractors to use. 

If you’re being asked to move umbrella provider, or are seeing fewer choices than before, this is not accidental. It’s a direct response to HMRC rules designed to tackle non-compliance and reduce risk across supply chains. 

Source: PAYE rules for labour supply chains that include umbrella companies from 6 April 2026

Why Is the Government Reforming Umbrella Companies? 


Why Is the Government Reforming Umbrella Companies? 

HMRC has spent several years investigating non-compliance in parts of the umbrella company market, particularly where PAYE tax and National Insurance were not being paid correctly. 

Historically, some umbrella providers used disguised remuneration schemes, such as loans or advances, to inflate contractor take-home pay. While these schemes often appeared attractive, they left contractors exposed to future HMRC action. 

HMRC estimates that hundreds of millions of pounds in unpaid tax have been lost through these practices since the early 2000s, prompting stronger regulation. 

Source: Tackling non-compliance in the umbrella company market

What Is Changing in April 2026? 


What Is Changing in April 2026? 

From April 2026, legislation under Chapter 11 of ITEPA 2003 changes who HMRC can pursue if PAYE tax is not paid correctly when a contractor works through an umbrella company. 

In practice: 
• Agencies or end clients become responsible for ensuring PAYE is operated correctly 
• Umbrella companies are under tighter scrutiny 
• Agencies and MSPs must actively control which umbrellas they work with 
• Contractors may be required to use approved umbrella providers 

Source: PAYE rules for labour supply chains that include umbrella companies from 6 April 2026

Who Do the New Rules Apply To? 

These changes apply to: 
• Contractors employed through umbrella companies 
• PAYE umbrella arrangements 

They do not apply to: 
• Limited company contractors operating legitimately outside IR35 
• CIS-only engagements 

Source: Working through an umbrella company – GOV.UK

Why Am I Being Asked to Change Umbrella Company? 

Agencies and MSPs have always been required to use compliant umbrella companies. However, recent tax and enforcement changes now place direct financial liability on agencies if any umbrella in the supply chain fails to operate correctly.

As a result, many are:

  • Re-assessing existing Preferred Supplier Lists (PSLs)
  • Removing umbrella providers that no longer meet updated risk and compliance thresholds
  • Requiring contractors to transition where necessary

This approach is about managing increased regulatory risk, ensuring compliance across the supply chain, and protecting contractors, agencies and end clients, not restricting choice without reason.

Will Changing Umbrella Affect My Pay? 

Will Changing Umbrella Affect My Pay? 

A compliant umbrella company should: 
• Pay you correctly under PAYE 
• Show clear deductions on your payslip 
• Pay tax and National Insurance to HMRC on your behalf 

Moving between compliant umbrellas should not materially change your take-home pay. Be cautious of any provider promising unusually high take-home pay. 

What Benefits Should Contractors Look for in a Compliant Umbrella Company? 

Beyond tax compliance, a good umbrella company should offer genuine employment benefits, stability and strong service levels. When choosing or being asked to move umbrella provider, contractors should look for the following: 

Transparent PAYE Payroll 

• Clear, itemised payslips 
• Income tax and National Insurance shown clearly 
• Accurate and on-time payments 

Transparency is a key indicator of compliance. 

Source: Working through an umbrella company

Pension Flexibility (Including Private Pensions) 

For many contractors,  especially higher earners, pension flexibility is essential. 

A compliant umbrella should: 
• Operate auto-enrolment correctly 
• Allow contributions to existing or private pension schemes where possible 
• Clearly explain employer and employee contributions 

Source: Workplace pensions

Continuity of Employment 

Umbrella working can provide continuous employment, even when moving between contracts, which can support: 
• Mortgage applications 
• Credit checks 
• Employment history 

Employee Benefits & Insurances 

Employee Benefits & Insurances 

Many compliant umbrellas offer optional benefits such as: 
• Personal accident insurance 
• Health cash plans or private healthcare options 
• Employee assistance programmes 
• Financial wellbeing support 

Financial Stability & Compliance Oversight 

Contractors should look for umbrellas that: 
• Are financially stable 
• Have a strong track record 
• Are subject to ongoing compliance audits 
• Avoid risky or artificial payment structures 

Umbrella insolvency can cause disruption and risk. 

Responsive Customer Support 

Good service matters. A reputable umbrella should provide: 
• UK-based support 
• Multiple contact options 
• Fast response times 
• Clear escalation routes 

Clear Communication (No “Too Good to Be True” Promises) 

Avoid umbrellas that: 
• Promise unusually high take-home pay 
• Use vague language around “tax efficiency” 
• Avoid explaining deductions clearly 

Source: Introduction to tax avoidance

What Contractors Should Be Doing Now 

Ahead of April 2026, contractors should: 
• Understand why umbrella choices may be limited 
• Review payslips for transparency 
• Avoid loan-based or tax-efficient schemes 
• Ask questions before switching providers 
• Stay within compliant supply chains 

Final Thought 

The April 2026 umbrella reforms are about removing risk and protecting contractors, not making contracting harder. 

Contractors who understand what’s changing and what to look for in a good umbrella will be best placed to continue working confidently and compliantly. 

Talk to Our Team About Your Umbrella Options 

Talk to Our Team About Your Umbrella Options 

Being asked to change umbrella company or navigate new rules can feel confusing, especially when you’re focused on doing your job and getting paid correctly. 

At Advance TRS, our priority is to make these changes clear, transparent and stress-free for contractors. We work with compliant umbrella partners and take the time to explain: 

  • Why are these changes happening? 
  • What it means for your pay, tax and benefits?
  • What to look for in a reputable umbrella company?
  • How to move providers smoothly if required? 

If you have questions about umbrella working, benefits, or what the April 2026 changes mean for you, our team is here to support you every step of the way. 

Speak to the Advance TRS team to understand your options and stay compliant with confidence. 

Frequently Asked Questions (FAQs) 

What is the umbrella company tax reform coming in April 2026? 
It strengthens HMRC enforcement and makes agencies and clients responsible for ensuring PAYE is paid correctly. 

Will I owe HMRC money if my umbrella gets it wrong? 
In most cases, HMRC will pursue umbrellas, agencies or clients, but non-compliant arrangements can still impact contractors indirectly. 

Does this affect limited company contractors? 
No, it applies to umbrella-employed workers only. 

Why can’t I choose any umbrella I want? 
Because agencies now carry financial risk and must restrict umbrellas to compliant providers. 

Will I lose benefits if I move umbrella? 
Not necessarily. Many compliant umbrellas offer pensions, insurance and other benefits. Ask what’s available before switching. 

Health and safety in recruitment

At Advance TRS, we put people first. Whether you’re a contractor on-site or part of our internal team, your wellbeing is our top priority. We don’t just talk about safety—we build it into everything we do. As a leading recruitment consultancy in the built environment, we embed health and safety in recruitment across our culture, compliance processes, and client relationships.

Zero Workplace Incidents: A Clear Goal

We actively pursue a safety-first culture across all assignments. Our ambition is simple: zero workplace incidents. Contractors placed in technical sectors such as rail, water, construction, energy, and infrastructure benefit from a clear focus on proactive safety.

Before a placement begins, we collaborate with clients to review site-specific risks, procedures, and expectations. We also verify that every contractor has up-to-date qualifications, PPE, and certifications. As a result, our preventative approach not only safeguards individuals but also protects project performance—reducing risk, avoiding downtime, and enabling long-term workforce success.

Health and safety that Protects People

To maintain the highest standards, we align our safety practices with ISO 45001, the international benchmark for occupational health and safety. This ensures every assignment includes structured, compliance-driven processes that reduce hazards and raise awareness.

To strengthen risk management, we provide:

  • Verified right-to-work and qualification checks
  • Clear onboarding with safety-focused inductions
  • Ongoing coordination with client H&S teams

By embedding compliance into every stage of recruitment, we help clients meet legal requirements while ensuring safer workplaces for contractors.

What is ISO 45001 Accreditation?

Supporting the Wellbeing of Our Team

We don’t only protect those we place—we also support the people who power our business. Internally, we foster a culture where both physical and mental wellbeing are treated as essential. That’s why we’ve created a workplace that encourages health, flexibility, and open communication.

We provide:

  • Flexible working options to support work-life balance
  • Private health insurance for peace of mind
  • A supportive environment where all voices are heard

To further support our team, we deliver regular H&S training, mental health awareness sessions, and access to wellness resources—ensuring everyone can thrive safely and sustainably.

Making Mental Health a Part of Workplace Conversations

Trusted by Clients in High-Risk Sectors

In industries like construction and infrastructure, there’s no room for error. That’s why clients turn to Advance TRS for safety-conscious recruitment. Our consultants understand the importance of placing individuals who are not only qualified—but also safety-aware and fully prepared for site conditions.

Because we prioritise health and safety in recruitment, we maintain clear communication with candidates and clients throughout the process. We also act quickly if concerns arise, ensuring swift resolution and continued compliance.

What is the CSCS Card? – Advance TRS

Health and Safety Is More Than a Policy—It’s Our Culture

At Advance TRS, safety isn’t a box to tick—it’s the foundation of how we operate. Whether we’re placing a contractor or supporting a team member, we make sure safety comes first. Our commitment to health and safety in recruitment shapes the way we hire, partner, and grow.

The Benefits of ISO-Certified and APSCo-Accredited Recruitment for Clients and Candidates

Choosing a recruitment partner with verified standards brings both confidence and clarity. At Advance TRS, we provide ISO-certified and APSCo-accredited recruitment designed to be fair, transparent, and fully aligned with legislation. This approach supports technical industries—such as infrastructure and engineering—where compliance is critical.

For employers, the benefits are tangible. You gain a partner who understands the complex demands of rail, water, construction, highways, and energy recruitment. With ISO 9001, we ensure structured, high-quality service delivery. ISO 27001 helps us safeguard sensitive client data. Moreover, ISO 45001 reflects our proactive focus on contractor safety and on-site risk management.

What is ISO 27001 Accreditation?

What is ISO 45001 Accreditation?

Candidates benefit too. Accreditation guarantees professionalism at every step of the journey. Unlike agencies that rely on shortcuts, we prioritise ethical recruitment through clear, honest communication and consistent support. Thanks to our APSCo membership, candidates receive equal opportunity, practical guidance, and a respectful experience from start to finish. You’re more than a name on a CV—we help you reach your goals with structure and care.

What is ISO 9001?

Why It Pays to Partner with a Compliant Recruitment Agency

Choosing Advance TRS means aligning with a consultancy that puts compliance and quality at the heart of its work. Through our ISO-certified and APSCo-accredited recruitment, we deliver reliable placements led by trained professionals who understand your sector and your standards.

Advance Training & Recruitment Services joins APSCo – Advance TRS

Whether you’re sourcing engineering talent or applying for a new role, accreditation gives you confidence. It shows that your recruiter operates with integrity, meets national and industry-specific benchmarks, and prioritises long-term success—not just short-term results. In every interaction, we strive to raise recruitment standards across the built environment.

Responsibilities at Advance TRS

Setting the Standard in Ethical Recruitment for Engineering

At Advance TRS, success means more than making placements—it means acting with integrity, responsibility, and respect. As a specialist consultancy in the built environment, we proudly lead in ethical recruitment for engineering. We align our actions with the highest legal and moral standards. This commitment is clear in our anti-slavery, anti-human trafficking, and anti-bribery policies, which guide our day-to-day operations.

Preventing Modern Slavery Through Ethical Recruitment Practices

We fully align with the UK Modern Slavery Act 2015. To go further, we take active steps to eliminate all forms of slavery and trafficking from our work. Our focus extends beyond legal compliance. We aim to protect everyone we engage with—ensuring fairness, dignity, and consistent support from start to finish.

Safeguarding Talent Through Compliance-Led Recruitment

As part of our pledge to ethical recruitment for engineering, we carry out full right-to-work checks. We only work with approved umbrella companies that meet our standards. To ensure fairness, we communicate clearly about contracts, rights, and expectations. Internally, our consultants receive training on identifying risks and reporting concerns. We also review policies often to stay ahead of new regulations.

👉 Find out more – Responsibility at Advance TRS Specialist Recruiters

Anti-Bribery Measures That Support Ethical Engineering Recruitment

Advance TRS enforces a zero-tolerance approach to bribery and corruption. We comply fully with the UK Bribery Act 2010. Furthermore, we have systems in place to drive ethical decision-making and maintain organisational accountability.

Responsible Hiring with Integrity and Transparency

Our anti-bribery policy applies across the business. We train staff to report unethical behaviour. In addition, our whistleblowing process provides a safe way to raise concerns. Promoting ethical recruitment for engineering means more than compliance—it builds a culture rooted in honesty and transparency.

Why Ethical Recruitment for Engineering Matters

Ethical standards define how we operate. They reflect our values, not just our policies. Whether you’re a client, candidate, or team member, you can count on Advance TRS to act fairly and do the right thing.

Building Trust Through Values-Based Recruitment

By committing to responsible recruitment, we earn long-term trust. We provide a safe, respectful experience for candidates. At the same time, we support ESG and governance goals for clients. These principles help us deliver high-quality, people-first recruitment.

👉 Find out more – Advance TRS Certifications and Awards

Join a Leader in Ethical Recruitment for Engineering

At Advance TRS, we don’t just follow ethical standards—we live them. Every day, we work to maintain responsible, compliant, and high-quality recruitment practices.

Explore Career Opportunities with a Responsible Recruiter

Join a company that puts people first. We value progress, fairness, and purpose at every step.

👉 View Current Opportunities – Advance TRS Jobs | Specialist recruiters for the built environment

Compliance isn’t just a checkbox for us at Advance TRS—it’s the foundation of every candidate placement, especially in high-regulation fields like rail and construction. By prioritising rigorous background checks, certifications, and continuous training, we ensure that every professional we place meets industry and safety standards, helping our clients stay compliant and reducing risk across all project sites.

Responsibility at Advance TRS Specialist Recruiters

Our Compliance Process

We place skilled professionals in heavily regulated sectors, where non-compliance can have serious consequences. Here’s how we keep compliance at the forefront of our recruitment process:

1. Background Checks

  • Comprehensive Vetting: Each candidate goes through thorough background checks that cover employment history, criminal records, and other regulatory requirements specific to the role and industry.
  • Verification: We verify key qualifications and experiences, ensuring that each candidate holds the credentials and practical expertise needed for their role. This helps eliminate unqualified candidates and maintains high standards across client projects.

2. Certifications and Qualifications

  • Regulatory Compliance: In sectors like rail and construction, certifications are critical. We check each candidate’s credentials, ensuring they meet the current standards set by regulatory bodies such as the Office of Rail and Road (ORR) and Health and Safety Executive (HSE).
  • Up-to-Date Documentation: We keep track of certification expiration dates and support candidates in renewing any necessary qualifications to stay compliant. This proactive approach allows us to supply professionals who are fully qualified for every project phase.

Advance TRS certifications and awards for the best service possible

3. Ongoing Training and Development

  • Safety and Industry Training: As regulatory standards evolve, so do our training requirements. We coordinate with candidates to help them access necessary courses, keeping their skills relevant and aligned with industry demands.
  • Client-Specific Standards: Some clients have unique compliance needs. For these, we provide additional training options to make sure candidates are ready to meet specific standards on-site.

4. Continuous Improvement and Monitoring

  • Regular Audits: Our compliance team regularly reviews our processes, ensuring we maintain best practices and adapt to changes in industry standards.
  • Feedback Loops: We welcome input from clients and candidates on compliance matters, using this feedback to fine-tune our approach and keep our practices effective and up to date.

Why Compliance Matters

In high-stakes industries like rail and construction, where safety and quality are paramount, compliance isn’t just about meeting requirements—it’s essential for maintaining safety, reliability, and trust. By committing to these rigorous compliance practices, Advance TRS helps create safe, compliant work environments that benefit everyone involved.

Good Governance at Advance TRS: Ensuring High Standards

When it comes to IR35 legislation ignorance is certainly not bliss, but this hasn’t stopped larger corporations from burying their heads in the sand and incorrectly leading with a blanket determination approach when it comes to implementing the amendments to the IR35 legislation.

Andy Ridout, Group Managing Director of Advance TRS, specialist recruiters for the built environment, speaks out to highlight the increasingly commonplace blanket approach being taken by many businesses in the lead up to the IR35 deadline.

The Scale of the Problem 

Many businesses are failing to adhere to the off-payroll legislation ‘reasonable care’ requirement and instead, are making blanket determinations. In the context of a contractor facing an IR35 enquiry, taking reasonable care constitutes acquiring independent legal advice or making a full assessment on an individual basis.

Role-based ‘blanket’ assessments fail to take into account the full factual detail required to assess each individual contractor’s status accurately.

“There will always be a requirement for a correctly assessed and determined contract workforce within the project-based built environment sector. Flexible, skilled and specialist contractors are particularly necessary to deliver project-specific works, where these skills are required for a certain project phase.

Opting to move this workforce to permanent staff or incorrectly inside IR35 will lose the flexibility that has required the use of contractors to date, and will see less qualified staff cost businesses more through incorrect contracts. Genuine contractors will leave companies who incorrectly push roles inside of IR35 to the detriment of project delivery. Is this a mistake you can afford to make?” Andy Ridout explains. 

These blanket determinations are an inappropriate response to the legislation, breaching the reasonable care requirement of the legislation section 61T(6)(c), insurance underwriters will not cover the tax risk unless an individual assessment has been conducted, and if investigated by HMRC, an inadequate role-based blanket assessment could trigger an extension of the enquiry window to six years due to ‘carelessness’ under Section S36(1) TMA 1970.

A Simple Solution 

Advance TRS thoroughly investigated the market and what options are out there to support contractors and clients throughout the changes, and have partnered with Kingsbridge to offer free and unlimited use of the Status Determination Tool for Advance TRS clients and contractors, conducting as many assessments as required.

“Perhaps the greatest frustration,” Ridout states “is that conducting accurate assessments and determinations is both simple and achievable, with agencies like Advance TSR offering detailed support for both clients and contractors. There are excellent insured solutions for candidates correctly determined outside of IR35 mitigating the risk to all parties throughout the supply chain. We have been working with Kingsbridge Insurance to bring their exclusive, award-winning IR35 Status Tool to our clients and contractors to support them through the determination process.” 

The Kingsbridge Status Tool asks between 29-34 carefully worded yes/no questions to ascertain an IR35 employment status. These questions – developed by Andy Vessey ATT, Head of Tax at Kingsbridge, qualified accountant, and a leading IR35 specialist who has defended over 500 tax investigations, most of which he has won – take a 360 view of both contract wording and working practices for as accurate a result as possible.

If it’s a clear-cut case, the tool then generates an instant determination, as well as a comprehensive report that pulls through the notable positives or negatives of your engagement. If it’s a borderline result, the answers given are passed over to one of Kingsbridge’s in-house IR35 specialists for further manual review.

Once an assessment has been completed using the Status Tool and determination has been confirmed, Kingsbridge Insurance offers an insurance policy, IR35 Protect, designed to help the full supply chain from contractor to client prepare for the 2021 private sector off-payroll reform.

The IR35 Protect policy:

  • Covers the potentially crippling costs that can arise from an IR35 investigation, including defence costs, unpaid tax, interest and penalties from HMRC.
  • Flexes come the reform deadline to indemnify whoever is held liable by HMRC.
  • Includes exclusive access to the award-winning Kingsbridge IR35 Status Tool (Premium Protect only), making it a one-stop-shop to get ready for the reform.
  • Costs just £199.50 plus Insurance Premium Tax at 12%.

“We’re currently the only IR35 solution provider on the market to offer this hybrid solution, and we firmly believe that it’s the best way to give you a quick, conclusive status result with all the support needed to guide you through the reform.” Andy Vessey ATT, Head of Tax at Kingsbridge

IR35 Protect and Legal Expenses add-ons are charged on a pro-rata basis to align with your existing policy term, although a minimum cost may apply. Find out more about Kingsbridge’s Legal Expenses and IR35 Protect policies on their website.

Just the beginning

Ridout explains that corporates looking to take an ‘easy route’ through the IR35 reform with blanket determinations are failing to see the longer-term impact of these decisions.

Aside from the obvious legal concerns surrounding blanket determinations, large corporations stand to lose out on industry talent to more agile SMEs that have correctly administered the legislation on a case-by-case basis. 

“SMEs correctly assessing individual determinations and using insured solutions will gain the advantage over corporate giants, as large corporate making blanket determinations leach talent and are unable to fill roles in the coming months and years. Contract flexible workforces have evolved through necessity and project-based works still require specialist contractors to deliver specific works. There is still ample time for businesses to re-assess their determination procedure and seek advice,” Ridout explains.

Advance TRS urge clients to reach out and speak to our team of experts to access support in delivering correct status determinations before the 6th April deadline and mitigate the risk of losing critical personnel unnecessarily.

Get in touch today 

If you would like a free consultation to discuss any of the content of this article, or simply wish to discuss how IR35 will impact your business, get in touch with our team.

Ensure you’re ready for April 2021. Contact our IR35 Lead Paul Merton on 01483 361061, email ir35@advance-trs.com or visit https://www.advance-trs.com/ir35/ for more information.

Due to freedom of movement within the EU, up to 31 December 2020, citizens from any EU country were able to move to the UK without having to apply for a visa, and start work right away. 

With Brexit, this changed from 1 January 2021. Free movement has ended and the UK has adopted a points based system, much like the one in Australia. For employers, this means that you have to register as a licensed sponsor to hire eligible people from outside the UK.

The new system transforms the way in which employers recruit from outside the UK and means that you now need to obtain a sponsor licence to hire from outside the UK, with the exception of Irish citizens.

Becoming a sponsor

There are some steps you need to take before applying to become a sponsor which include checking that the people you want to hire will meet the requirements for coming to the UK for work, as well as checking whether your business is eligible.

To apply, you will then need to choose the type of skilled worker licence you want to apply for and put appropriate systems in place to act as a sponsor. There is an application fee that will need to be paid. 

Once you have finished your application, you should have a decision within 8 weeks. If you are successful in becoming a licensed sponsor it will allow you to recruit skilled workers from anywhere in the world for 4 years. 

Workers’ requirements

Anyone coming to work in the UK will need to have a job offer from an approved sponsor, the job offer must be at the required skill and salary level and they must speak English at the required level.

When looking to hire someone from outside the UK (excluding Irish citizens), there are minimum skill and salary thresholds the role you are advertising must meet. Those are as follows:

  • Minimum skill level: Set at RQF3 which is equivalent to A level
  • Minimum salary threshold: The higher of £25,600 or the ‘going rate’ for the job; some employees may be paid less than £25,600, for example if their job is in a shortage occupation
  • Applicants from outside the UK must also meet English language requirements

If the worker meets the above requirements and you are a licensed sponsor, you will be able to sponsor their application to come to the UK to work.

EU citizens already working in the UK

The new system will not apply to EU citizens already living and working in the UK, and there are no further steps for you to take as an employer. EU citizens and their family members living in the UK by 31 December 2020 should apply to the EU Settlement Scheme which we have spoken about in a previous blog.

Those eligible to apply for settled status must do so by 30 June 2021.
If you would like to find out more about the new points-based immigration system, you can listen to the podcast episode the Home Office recorded in partnership with Intelligence Squared.

WHAT IS IR35?

IR35 was introduced in 2000 to address concerns relating to individuals who supply their services via an intermediary (such as a Limited Company) instead of as an employee. Therefore, they avoid paying employee income tax and national insurance contributions.

Where an assignment is deemed ‘inside’ IR35, PAYE deductions must be made from the contractor’s pay. Any assignment ‘outside’ IR35 is classed as a genuine B2B service and is not subject to the same tax treatment as employees. Advance TRS are here to support you through these reforms.

We have partnered with IR35 experts Kingsbridge and Liquid Friday to guide our client and contractor communities through the changes in legislation. Browse our latest IR35 news, read our FAQs or get in contact with any questions you might have.

WHAT HAS CHANGED AND HOW DOES IT IMPACT ME?

From 6th April 2021, following changes in the public sector in 2017, the government extended the reform to the legislation to capture large parts of the private sector. The key change is that the responsibility of defining the IR35 status of the assignment switched from the individual’s Ltd company to the client, as the recipient of the services.

The legislation states that all companies must take ‘reasonable care’ when assessing if roles are inside or outside of IR35. Taking a ‘blanket approach’ to assess all roles won’t deliver this. We have spoken about the reasons in a recent blog article.

The potential financial penalties can be significant if incorrect steps are implemented, but there is support available to help.

WHAT DO I NEED TO DO TO ENSURE THE CORRECT DETERMINATION?

We are working with clients and contractors to ensure everyone has taken the necessary steps. We’re also ensuring they have been given the correct IR35 determination for them.

  1. SPEAK TO YOUR CONSULTANT – If you are concerned about whether you have taken the necessary steps and want some guidance, the best place to start is by calling your consultant. They will be able to discuss how the reforms impact you and your method of engagement. 
  1. GET A SELF-ASSESSMENT – Next, you can use the Advance TRS free self-assessment tool to confirm your determination and which method of engagement is suitable for you going forward.
  1. CONFIRM YOUR METHOD OF ENGAGEMENT GOING FORWARD – Once you have completed your self-assessment you will need to confirm any changes with your client and agency to issue any new contracts/rate changes and agree your transition date.
  1. PURCHASE IR35 INSURANCE  – To ensure you and the supply chain are protected, we recommend purchasing IR35 Protection Insurance from our partners Kingsbridge who offer a Zurich underwritten policy

THE ADVANCE TRS APPROACH – Be prepared and proactive

Due to the scale of the impact of this legislation, we were prepared well before the Reform came into effect. This ensures our compliance and working practices facilitate confident determinations.

Listen and Learn – Our ability to gather intelligence from multiple sources allows us to learn at a faster pace and deliver the most informed approach to all parties.

Openly Communicate – Face-to-face meetings and regular bulletins provide clients and contractors with the most up-to-date information on how best to set out our working practices.

Free Self-Assessments – We worked with Kingsbridge to offer free self-assessments for contracts.

An Insured Solution – We understand the importance of peace of mind, so have worked with Kingsbridge to offer a Zurich underwritten insurance product to protect the whole supply chain.

WHY ADVANCE TRS?

  • Offering free self-assessments and IR35 insurance to protect the whole supply chain
  • APSCO accredited engineering recruitment consultancy with sector specialist consultants
  • ISO18001, ISO9001, ISO27001 certificated and 5* RISQS since the inception of the scheme
  • Huge financial investment in contractual documentation reviews from recruitment expert solicitors
  • Robust contracts and terms of business that are compliant with current government legislation
  • Open book policy on working practices with contractors and clients
  • Excellent legal support from expert recruitment and financial specialists
  • IR35 guidance from FCSA accredited supply chain partners
  • Partnered with Kingsbridge Insurance, one of the UK’s leading suppliers of PSC insurance packages
  • Over 100 years collective experience of engineering recruitment
  • Dedicated business services team focused on contractual compliance and payroll excellence
  • A compliance-focused supply chain partner experienced in supporting all levels of project delivery

A LITTLE MORE BACKGROUND INFORMATION ON IR35

HMRC IR35 legislation has been in place since 2000, but non-compliance is widespread.

HMRC estimate that only 10% of those who should be applying the rules do so, which will cost the Exchequer £1.3 billion in 2023/24. This deprives vital public services of important funds and is unfair to taxpayers who are complying with the rules.

Whilst the compliance of PSC workers has been a relatively mute subject for the last 20 years, HMRC have now realised there is a significant need for focus and attention on the management of this area of taxation, more specifically in relation to employers’ national insurance contributions.

With such significant growth in the number of £multi-billion engineering projects across the UK, there will always be a requirement for the engagement of a highly skilled and flexible workforce that is prepared and willing to move from project to project.

It is essential that this workforce becomes more educated on and compliant with the options that are available to them if they wish to remain off-payroll for the duration of their assignments. Advance TRS Ltd. are committed to providing the highest level of service and engagement throughout the recruitment process to ensure that workers and clients can deliver their services and their projects successfully in the knowledge that their status determination truly reflects their employment status.

It is important to learn from the public sector reform and ensure that we keep contractors fully briefed on their options whilst enabling clients to make confident and informed decisions.

It is essential to approach the private sector reform through the utilisation of all information and facilities available to each member of the supply chain. This offers the flexibility to evolve with HMRC decisions whilst retaining a common goal of providing resources to deliver projects.

It is clear that the public sector ‘blanket approach’ determinations should be replaced with the recommendation that contractor IR35 status assessments are dealt with on a case-by-case basis. This approach offers an assurance to valuable workers that their interests are treated fairly, in line with the legislation and not just for the benefit or safety of the end-user.

One of the key aspects of managing the implementation and impact of the IR35 private sector reform is to ensure that each party in the supply chain recognises their responsibility, communication is clear and processes of due diligence and compliance are auditable. Contractors must take responsibility for the management of their accounts and affairs whilst engagers must extend fair treatment or ‘reasonable care’ to their contractors by preparing diligently and not leaving off-payroll working processes and considerations to the 11th hour.

ADVANCE TRS

We have the operational capability to adequately deal with the extra administrative burdens and will work closely with all parties to manage a case-by-case approach.

HMRC is due to announce a Reform to the IR35 off-payroll legislation in the Private Sector. The Advance TRS approach to IR35 is being exceptionally well received by clients we have recently consulted with, mitigating risk for our clients with a compliant and insured solution.

Consultation dates are still available in 2019 – book your free session now.

Lessons learned from the Public Sector

Since the Public Sector Reform last year our Group Operations Director, Paul Merton, has worked hard to create a method of engagement that facilitates the continuation of supply of professional contractors in the correct manner via a professional services company.

He has attended a large number of IR35 seminars including several HMRC consultation meetings earlier this year. As a business rooted in the engineering recruitment sector, we are fully aware of the need to sustain a skilled workforce that can move freely from one project to the next without the need to be engaged as an employee.

Whilst IR35 in its initial form afforded many contractors significant tax benefits, the more recent changes have brought about a very clear definition of controls and the manner in which these workers must engage. Advance TRS has invested a great amount of time in understanding these controls and building them into our management system.

Rather than seeking to bring an end to contracting and force contractors into employment contracts that they do not necessarily want or need, we have dedicated our time to creating a contractual solution that demonstrates very clear processes and compliance with the guidelines set out by HMRC.

Whilst the reform requires the end-user to provide a determination, it also makes provision for the responsibility to pass to the fee-payer (agency) on the basis that ‘reasonable care’ has been shown in the determination. It is our intention as a business to ensure that all contractors are engaged correctly with a clearly defined control mechanism and auditable due diligence across Umbrella, PAYE, CIS self-employed and Professional Service Company.

Responsible compliance processes

The change in responsibility that is set out in the Private Sector Reform along with the opportunity to focus on the compliance of all parties in the supply chain has prompted us to review how we supply contractors to our clients.

The Advance TRS process of compliance will allow us to administer an honest and realistic ‘outside IR35’ determination that has been professionally assessed and insured to allow our clients to demonstrate ‘reasonable care’ in the eyes of HMRC.

Advance TRS is committed to partnering with any client who engages contractors through us and will provide full support and disclosure of associated documentation where required.

Managing costs and administration

The Public Sector Reform brought about numerous blanket ‘inside IR35’ determinations which saw large numbers of contractors increase their rates by 15-25% to accommodate the rise in taxation, HMRC have been clear in their guidance that they do not expect to see this in the Private Sector Reform.

Advance TRS provide a solution that not only facilitates the correct manner of engagement for these workers but will also allow clients to remove intermediaries from the supply chain who will become a cost to the business rather than providing a viable route to market. Whilst Advance TRS are unable to remove the responsibility for the determination from the end-user, we are able to provide an auditable and insured solution that will allow us to take responsibility for administering the determination itself. As a partner supplier, we firmly believe we can deliver the administration service for a nominal charge.

Contractor engagement – documentation and legislation

The end result of this process is to facilitate seamless and compliant administration and engagement of a contractor base who will each be determined and contractually engaged in the correct manner.

Due to the current political climate, the timescales for implementing these changes will become increasingly smaller once we enter 2020. The Reform also offers clients an opportunity to review their existing supply chain and the contracts of engagement that are in place with their contractors as well as the umbrella companies they engage.

The risk of poor compliance processes in the supply chain is that it can leave clients exposed if relevant legislation updates are not addressed adequately.

Don’t leave it too late, speak to us now about any questions or concerns you might have! Contact our IR35 Lead Paul Merton on 01483 361061 or ir35@advance-trs.com to book your free consultation.