Crawford Temple is CEO of Professional Passport, the largest independent assessor of intermediary compliance.
Here, he outlines some new and concerning trends that are growing in popularity with both established and new providers as mounting pressure grows on recruiters’ short-term business needs and provides a steer on how to avoid being lured into business opportunities that are simply illegal.
Beware of third-party sellers and sales lead generation companies
Many of these organisations seek to front their offering with an accredited provider to create a perception of compliance. Once leads are received, and where the individuals are looking for higher returns, they are often introduced to a different offering which Professional Passport would not recognise as compliant.
These companies offer significant financial incentives to recruitment consultants for introductions, regularly to sums of around £400 each. With umbrella charges typically equating to around £20 per week, it is difficult to understand how these large financial incentives can be offered through standard compliant offerings.
Many of the ‘high return’ models operate significantly higher charges whilst at the same time returning larger take home pay for workers. Where compliant tax arrangements are used, the take home pay from providers will be broadly the same, with the only difference being where the charge varies, which should only result in a few pence difference to a worker.
Beware the ghost system
In a ‘ghost’ system, providers seemingly operate compliant offerings with many workers engaged by a standard umbrella style arrangement. Contracts and evidence provided bear the hallmarks of a compliant offering and so attracts little concern. Behind this seemingly compliant offering lies a separate offering that is only offered to workers who express a desire for higher returns.
These non-compliant offerings typically fail to provide workers with pay slips or other communications relating to the breakdown of pay so that these would have to be requested by the recruitment company directly from the provider. The examples provided do not reflect the reality of the arrangements and are designed to mislead.
In both the arrangements outlined, recruitment companies will see a sudden increase in workers operating through a specific provider for no apparent reason. This could be the first sign that something might not be right.
HMRC holds the appropriate information that would make it easy for them to pinpoint non-compliant schemes and could be working to close them down faster. Real Time Information (RTI) reporting that was introduced in 2013 along with the 2014 Intermediary Reporting provides HMRC with two sets of data that gives a unique insight into the market and the supply chain. Matching that data should set alarm bells ringing and help HMRC to identify a dubious provider and shut it down with immediate effect.
Working with a compliant umbrella firm that has passed a rigorous and robust accreditation process will give recruiters peace of mind and assurance that they are operating above board.
Professional Passport’s terms include:
- A ban on the use of third-party sellers, lead generation or outsourced marketing arrangements. Providers must operate using their own in-house teams. Failure to adhere to this would see a provider’s approved status immediately revoked.
- Confirmation that all income has full PAYE applied in line with HMRC rules and none of the following solutions are offered: EDM, Pay Day by Pay Day, Mini Umbrella, Offshore Pay.
- All leads received by the accredited company must be handled by that company and no lead can be passed on to a third-party organisation that has not been subject to a full Professional Passport compliance review.
Any breaches to these terms will immediately see a provider’s approved status revoked. Market intelligence is vital in stamping out non-compliance and we would urge recruiters to contact Professional Passport by using this form so that it can continue to monitor providers for non-compliance.
Ignorance is no defence and the supply chain needs to work together to drive up standards and promote the importance of compliance. The message is clear: work with compliant partners that you trust and be wary of firms that seem to be aggressively cashing in on new upcoming legislative changes. Don’t make snap decisions, trust your instincts and if something looks or feels too good to be true then it probably is.
You can find many useful articles and videos on the Professional Passport website in the Hot Topics section .