Compliance for Umbrella Companies
What you need to know


Main Areas of compliance for Umbrellas


Ask any contractor who has been contracting regularly for the last few years what the best and worst bits about their job are and you can be assured that somewhere in that list of ‘worst bits’ will be the phrase ‘IR35 legislation.’ IR35 has been the bane of many contractors’ lives for a long, long time and is certainly the most unpopular piece of legislation ever aimed at one sector of workers.

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Agency Workers Regulations

The Agency Workers Regulations (AWR) were brought in on the 1st October 2011, were applicable to all ‘agency workers’ and were aiming to give them all the exact same work and employment conditions that they would have been given if they had been working directly for the end client (rather than through an agency) doing the same job

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GAAR came into effect on the 17th July 2013 and was introduced in order to counteract any ‘tax advantages arising from any tax arrangements that are abusive.” The legislation is built around the fact that tax arrangements exist (and have always existed and will probably always exist) wherein obtaining a tax advantage is ‘one of the main purposes’ of those arrangements.

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Onshore Intermediaries

On 6th April 2014 Onshore Employment Intermediaries legislation (false employment) was introduced as part of the 2014 budget. The aim of the legislation was to make sure that recruitment agencies who hire self-employed traders who are actually employees (working on behalf of their long-term clients) take responsibility for deducting PAYE income tax and NIC’s from their gross pay.

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Offshore Intermediaries

During the 2013 budget the UK government announced that they would be consulting on making changes to the regulations on Offshore Employment Intermediaries in order to put up more of a deterrent against NIC and PAYE avoidance schemes. HMRC was investigating various schemes that attempted avoidance using offshore intermediaries and which were mostly trying to avoid secondary employer Class One NIC’s.
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