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14 months after a consultation into the umbrella industry, the government still hasn’t issued its response – despite a 400% increase in umbrella working since 2007/08.
Experts have called on the government to publish the findings of its consultation into the umbrella company market, which concluded over a year ago. The lack of action leaves over 500,000 people working in an unregulated industry where tax avoidance schemes and financial misconduct are commonplace.
In November 2021, the government launched a consultation to explore the role of umbrella companies in the labour market amid concerns about tax avoidance and unlawful working practices, which pose a threat to workers and also leave billions uncollected in tax.
The consultation closed in February 2022. However, well over a year later, the government has not issued a response or confirmed when it will publish its findings.
This is despite the significant increase in umbrella working in the UK which, according to HMRC’s own data, grew from around 100,000 workers in 2007/08 to well over 500,000 by the 2020/21 tax year – a 400% increase.
Fred Dures, founder of specialist payroll auditor, PayePass, commented: “The silence is deafening. It’s time the government took action, which starts by at least responding to its very own consultation imminently. Right now, it just feels like this consultation was launched as lip service.
“The longer the government buries its head in the sand, the more workers there are exposed to tax avoidance schemes. To make matters worse, these schemes see billions in tax slip through the net – at a time when the economy and public services need it more than ever.
“The lack of urgency is startling, particularly in a sector where hundreds of billions pass through it every year. The government promised to regulate the umbrella industry in 2017, yet here we are, six years later. It’s anybody’s guess as to what the government plans to do next.
“500,000 umbrella workers is a conservative estimate, too. Since the roll-out of the off-payroll working rules, it’s widely acknowledged that tens, if not hundreds of thousands of people have started working via umbrella companies.
“It’s in everybody’s interest to do something. A plan to stamp out non-compliance in the umbrella industry means workers and businesses are better protected, with the Treasury collecting more in tax.”