As a result of the Agency Workers Regulations we are already seeing an increase in the number of offshore umbrella providers, and they are getting better at hiding their true identity.
As end clients [Hirers] rarely see how their temporary workers structure their business arrangements, all you receive is an invoice from your recruitment company, it is essential that you take steps to protect you from being classed as a 'Host Employer'.
We are already seeing an increase in the number of offshore umbrella providers operating in the market as a direct result of the AWR and advise extreme caution to any organisation considering one of these providers.
There are a number of areas that should be of concern:
They could potentially be caught under MSC Legislation and expose the recruitment company and end clients to debts under The Debt Transfer Rules.
End clients could become liable to unpaid National Insurance Contributions under three pieces of legislation:
1. Host Employers - Paragraph 9 Schedule 3, Regulation 5 Social
Security (Categorisation of Earnings) Regulations 1978
2. Agency - Paragraph 2 Schedule 3, Regulation 5 Social Security
Categorisation of Earnings Regulations 1978
3. Section 689 ITEPA 2003
In summary HMRC have a number of options that potentially allows them to pass any Tax or National Insurance shortfall directly back to you, the end client.
For those reasons we would never suggest using an offshore arrangement. This also emphasises why end clients must become aware of any third party providers used by their recruitment partners.
Professional Passport can audit your recruitment companies preferred supplier listings and any third party suppliers to help identify and then eliminate any risks.