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Labour denies umbrella company crackdown, claims Parasol

It was widely reported earlier this week that party leader Ed Miliband would set out plans to “prevent so-called umbrella companies being used by firms to avoid tax and national insurance by exploiting expenses rules” in his conference speech.

In the event, Mr Miliband made no direct reference to umbrella companies – but several media outlets were still reporting afterwards that the clampdown was part of Labour’s plan to combat tax avoidance.

Derek Kelly, managing director at Parasol’s parent company Optionis, said: “There is a lack of clarity over what, if anything, Labour is actually proposing.

“Despite the party PR machine suggesting ahead of the speech that talk of a crackdown was forthcoming, Mr Miliband made no reference whatsoever to umbrella companies.

“We contacted Labour HQ on Tuesday afternoon, and were told very clearly that anything not included in the speech should be dismissed as speculation.”

Kelly added, “I’m sure we haven’t heard the last of this. However, for the record I would urge policymakers to steer clear of tarring all umbrellas with the same brush.

“No one can deny that there are some unscrupulous providers operating at the less reputable end of the market – often in sectors such as construction, warehousing and hospitality.

“However, it is important to make a distinction between those firms and professional, compliant employment providers – such as Parasol – that offer skilled contractors and freelancers genuine support.

“Until politicians and civil servants grasp this, it sadly seems inevitable that our entire sector will continue to be dragged unfairly into the ongoing debate on tax avoidance – damaging Parasol and other compliant providers by association.”

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