Enforcement key to offshore umbrella company crackdown
Responding to the inclusion in the draft Finance Bill 2014 of measures to address the use of offshore employment intermediaries, Parasol warned that new legislation would effectively be meaningless without government action to support it.
Derek Kelly, managing director at Parasol, said, “It’s pleasing to see policymakers acting to enshrine in law the principle of UK tax for UK workers.
“As a UK-based company that pays all relevant PAYE tax and National Insurance contributions (NICs) on behalf of the skilled contractors and freelancers we employ, we welcome all steps to combat offshore tax avoidance.
“Offshore umbrella companies operate unethical, unsustainable business models and give the professional outsourced employment sector a bad name.”
He added, “Legislation is pointless, however, unless it is properly enforced. Genuine enforcement doesn’t mean going after one company two years after the legislation is introduced and seeking to make an example of it by closing it down.
“What we need is wide-ranging, comprehensive enforcement from day one. In my view, this means directors of offshore providers should be pursued directly by the authorities.
“The threat of personal asset seizure and even prison sentences for unscrupulous individuals who operate offshore schemes would serve as a genuine deterrent and change the market for the better.”
Cheshire-based Parasol, a founding member of the Freelancer and Contractor Services Association (FCSA), has employed more than 70,000 skilled career contractors working in sectors such as IT, telecoms and engineering since its launch in 2000.
The company works with major recruiters including Hays, Alexander Mann Solutions, Adecco, Capita Resourcing and LA International.
The offshore employment intermediaries legislation is due to come into force in April 2014.
Following today’s publication of the draft Finance Bill, Parasol repeated its call for the introduction of standardised reporting criteria to enable compliant employment services providers to demonstrate their legitimate onshore status to their recruitment agency partners.