12 October 2021 
Julia Ascott, Employment Taxes Specialist
On 11 October, HMRC published guidance for agencies and other businesses using umbrella companies. The focus of this guidance is to ensure businesses continue to check the authenticity and compliance of their supply chain or risk being penalised as an enabler of tax avoidance schemes.
HEIs often use umbrella companies to take on temporary workers. The common issue with the use of umbrella companies is that payments from the umbrella to the worker are not always subjected to tax/NIC. If that payment is part of a tax avoidance scheme, HMRC may issue a penalty to the university as an enabler of tax avoidance, as well as publishing your details.
It is therefore incumbent on the university to carry out suitable checks of their supply chain, using protective clauses in contracts with umbrella companies and (if you are able to) check the payslips of the workers to review the PAYE/NIC deductions noting any payments that haven’t been taxed or noting a significant shortfall of pay against the known payment to the umbrella company.
Following on from this, HMRC have also produced an article for BUFDG members on the basics of tax avoidance that you might want to provide your colleagues.
