Use of Payroll / Umbrella Companies and HMRC Dispensation Schemes

Our newsletter dated 8^th May 2009 highlighted the issue of agencies using umbrella companies / Travel subsistence payment schemes with many of them able to enhance their margins as a result.

It seems this is coming very much under the scrutiny of both the GLA and HMRC; not before time as the recruitment industry has been desperately in need of clarity and guidance on this issue.

The GLA issued guidance in March 2009 on how the GLA’s licensing scheme applies to payroll companies (sometimes referred to as “umbrella” companies) and businesses operating mobile workers tax relief schemes.  This stated:

---

“Payroll Companies

We are aware of a number of “payroll” companies who employ workers directly to offer tax savings. Please be aware that any such company must hold a GLA licence if they have contracts of employment with the workers. If you use such a company that is not licensed by the GLA, your licence will risk being revoked under Licensing Standard 8.1. It is also a criminal offence to use an unlicensed business.

Mobile Workers Tax Relief Scheme

Companies who operate a mobile worker tax relief scheme must be able to prove they have appropriate dispensation from HM Revenue and Customs (HMRC) and operate the scheme in line with that dispensation. We will verify the dispensation with HMRC.”

---

The GLA has noted an increased use of both types of scheme. It is necessary to ensure that such schemes are being operated correctly, and therefore need to establish that all Licensing Standards are being complied with, particularly whether the employee is correctly in receipt of at least the appropriate Minimum Wage.  Additionally, the application of any dispensation or mobile workers scheme will be assessed against licensing standards.  Both these issues are critical under the GLA Licensing Standards – this means a licence risks being refused or revoked if the GLA identifies non-compliance.  The GLA will be issuing detailed guidance on the risks associated with operating the schemes shortly.

Agencies operating any of these schemes, or using payroll services are expected to notify the GLA by 17^th July 2009.

Kind regards

Jon Derbyhire
Head Office

Kimada House 442 Flixton Road•Flixton•Manchester•M41 6EY
• www.heads-uk.com
• e: Jon.Derbyshire@heads-uk.com
• t: 0161-746-8811
• f: 0161-749-7369

If you do not wish to receive further emailings from Heads Recruitment, please email
UnsubscribeA@heads-uk.comand include 'remove' in the subject line.

MANCHESTER Tel: 0161 746 8811 Fax: 0161 747 7940

HALIFAX Tel: 01422 373 998 Fax: 01422 375 970

LEEDS Tel: 0113 383 5324 Fax: 0113 383 5325

WAKEFIELD Tel: 01924-364-111 Fax: 01924-366-444

SHEFFIELD TEL: 0114 251 6767 Fax: 0114 251 6700