Following the response to the Consultation on Tackling Non-Compliance in the Umbrella Market, together with the statements made by the Chancellor on the intended changes to the responsibility to operate PAYE, we have to question why the decision has been made to wait 12 months to address the situation.
ONS Data published last week shows that the Chancellor with a £4.2Bn difference between forecasted borrowing in February and actual borrowing so here we once again highlight a ‘pot of gold’ waiting to be collected NOW. Whilst it certainly won’t fill the whole deficit working with the compliance accreditations and proactively using the data HMRC holds can immediately prevent further tax losses, and in turn result in additional monies to the Exchequer at these difficult times.
The simple fact is that by waiting until April 2026, a ‘sell by’ date has been confirmed and, as a direct result, we are likely to see an explosion of disguised remuneration schemes entering the market.
This boom is likely to attract more workers into these arrangements and result in many more workers facing a cliff-edge drop in their earnings in April 2026, as we saw when the Off-Payroll rules were introduced. This strategy once again plays into the hands of the non-compliant providers and creates a second vacuum for the disguised remuneration operators to fill, as they did when the Off-Payroll legislation took effect.
With the Government under increasing financial pressure and having to announce cuts in areas that are not being welcomed by members of their own party, surely there must be a better way to help plug the gaps.
In our article published on Friday 21st we provided the evidence to show HMRC already has the data, a real gold mine of data that is currently being ignored. We also provided all the calculations required for HMRC to compare the data acquired through the Intermediary Reports and submitted by RTI.
Creating this analysis, which would appear relatively simple to achieve, provides the information to identify the schemes immediately and shut them down. This could be achieved even faster if HMRC worked with the compliance accreditation bodies. Accreditation bodies could gain the authority of their providers to allow HMRC to comment on this analysis and where the numbers were outside of an agreed range the provider accreditation would be lost. This loss of accreditation would immediately remove their access to large parts of the market, removing significant commercial incentives and advantages.
If this was acted upon quickly, we have always believed that the impact on the market would be so significant that the proposed changes, with the accompanying disruption and cost to businesses, could be avoided.
It removes the sell by date and heralds a new era of real time compliance enforcement, which is going to be required to support the new rules in April, so why not start now?
So the question is why wait and lose more money? Is Rachel Reeves, HM Treasury and HMRC receptive to recognising that maybe there is a better way for now?
This would result in significant monies flowing back into the Treasury almost immediately. The whole sector would embrace this approach, with the exclusion of those running the schemes.
Once the positive impact of these immediate changes is understood, a new assessment based on the resulting shape of the market could be carried out with more targeted measures brought in to further tighten compliance.
AI’s conclusion was that the most efficient and practical approach was to develop the tools to analyse the data. By leveraging existing data, HMRC can improve compliance without creating unnecessary business disruptions.
