Connecting to LinkedIn...


Recruiters Is your due diligence diligent enough?

All Umbrella Companies Are Equal have been passed information from one of their members which demonstrates the lengths that some avoidance scheme promoters will go to to try and convince recruiters that they are compliant. The umbrella company was asked to assist a recruitment agency, with whom they work closely, to carry out an investigation into another umbrella company that had been on their PSL as their suspicions had been raised as to their standards of compliance. The results of the investigation were shocking:

The company was based in the Isle of Man prior to the disclosure agreement being signed with the UK Government, they subsequently relocated to Panama.

They operated & lsquo;mirror’ companies which were registered in the UK and that had UK bank accounts so that recruiters would believe that they were dealing with a UK registered company. Monies collected in the UK are then transferred offshore without any terms of agreement being in place

Workers are issued employment contracts which are not written in English and are replaced each year

Workers are paid National Minimum Wage with the rest of their contract income being paid as an employment loan

They actively target contractors working onsite, incentivising them to use the service they offer, rather than engaging with recruiters

They maintain that their business model means that contractors do not fall within scope of the AWR (They seem to be relying on the & lsquo;professional exemption’ contained within the legislation it’s a common misconception that professionals are excluded, the legislation actually says that the agency or hirer must be a & lsquo;client’ of someone carrying on a profession)

The umbrella company under investigation had provided the recruiter with, what appeared to be, an over-arching contract of employment and all communication came from their UK address which turned out to be serviced offices their trading offices were offshore.

On the face of it the company appeared to be a compliant, UK based umbrella company the reality was something else entirely. The recruiter in question acted on the information received and terminated all associations with the umbrella company immediately thereby protecting their business.

Legislation relating to offshore employment intermediaries is changing in April 2014 and recruitment agencies that engage with offshore umbrella companies will have absolute responsibility for the contractors’ PAYE tax liabilities.

In light of the recent enquiries, and we assure you that this is not the first, All Umbrella Companies Are Equal are offering recruitment consultancies a review service of their existing PSL. As a group we have a vast experience in the industry, and in light of the legislation change we are also looking to offer a service to help agencies perform due diligence on any companies that they are looking to engage with.

If you would like to get further details on this, then please get in touch via the website at


Articles similar to

Articles similar to