We recently received a news article from Recruiter titled ‘Recruiters urged to protect against umbrella failures’. A link to the article can be found here.
The author explains there are rumours of several payment companies owing millions of pounds in tax which they can’t pay. In the event of insolvency, the workers would be last in line for payout, and unlikely to receive any unpaid wages.
We believe there is a bigger problem here that is bubbling under the surface. Since Alistair Darling announced the HM Revenue and Customs (HMRC) Time to Pay scheme in November 2008 it has helped up to 150,000 businesses delay the payment of their tax. There are now rumours that this scheme is likely to be scrapped. We ask how many umbrella companies took up this scheme, and have merely deferred their own insolvency? It is possible we may find out in the very near future..
An umbrella company that is in difficulty now, is likely to have already made use of this deferment, and this may be a good indicator of possible problems to come. It may be prudent for agencies to ask their suppliers for written assurances that they have not entered into any arrangements with HMRC to defer tax or VAT payments.
As for Zeva, I can guarantee that we have entered into no such arrangements, and we are 100% up to date with our tax and VAT.
It should also be noted that the closing paragraph warns….
“Given HMRC’s current policy of investigation it is crucial that agencies ensure they have correct procedures and contracts in place. Agencies should never rely on third-party accreditation or the size of an organisation. Regrettably these recent events have served as a siren warning for all, and without doubt have again damaged the reputation of the umbrella industry.”
Zeva as always doesn’t expect the agency just to believe that we complete all the necessary documentation, but our actual contractual documentation is available for inspection and download, in real time on the agency’s online account. click here .
Updated 10th February 2010
JSA Responds:
http://www.recruiter.co.uk/jsa-responds-to-umbrella-failure-advice/1004291.article
It is yet to be seen if this reassures JSA’s clients sufficiently. Zeva do wonder what role Professional Passport played in this, and did it inform JSA’s customers of the problems JSA was encountering? Who does Professional Passport protect, the agency or the umbrella company? If given the choice, would an agency prefer to work with a provider in financial difficulties, or one that isn’t, such as Zeva?
