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Recruiters urged to choose compliant umbrella companies following exposure of £45m fraud case

The Freelancer and Contractor Services Association (FCSA), the UK’s largest trade association for professional employment services, is firing a word of caution to recruiters before choosing which umbrella company to partner with. The advice comes following the news that umbrella company Quality Premier Services has been convicted of committing a £45m tax fraud.

FCSA’s advice to any recruitment firm choosing a compliant umbrella company is:

  • Choose a member of recognised professional body which has compliance testing as a prerequisite – but make sure you know what both the membership type and the accreditation means in practice as standards can vary. To become FCSA accredited (not to be confused with associate status), applicants must demonstrate compliance with our published code, and need to pass an independent assessment by regulated accountants and solicitors.
  • Ensure they are operating within the law and provide:
    • National minimum wage payments that are in line with legislation.
    • Expenses should be made in line with HMRC legislation and guidance. If expenses allowances are too good to sound true then this should raise alarm bells.
    • Holiday and statutory payments such as sick pay, maternity pay and paternity pay
    • An overarching contract of employment
    • Full employment and statutory rights
    • The provision of guaranteed hours
    • Access to a workplace pension

Any compliant professional employment company will offer the above as a minimum requirement, and will be happy to provide evidence of doing so.

Julia Kermode, chief executive of FCSA said: “While there are some cases of bad practice amongst a minority of businesses which have grabbed the headlines, there are also a large number of highly compliant organisations working ethically and correctly to provide a high level of service for its clients and contractors. The challenge comes in identifying a compliant company you can trust, sound in the knowledge that it continues to work within the rules. In this case, recruitment firms could have requested evidence of VAT returns for this company to confirm that they were indeed paying it appropriately.

“Don’t underestimate the importance of doing proper due diligence on your supply chain partners, the reputational damage and financial risk of getting this wrong could be significant. There are an alarming number of recruitment firms that don’t have time to do even basic checks, but this case highlights the importance of investing the time in compliance. FCSA can help – by choosing to work with FCSA Accredited companies you have peace of mind that we have done the compliance testing so you don’t have to. Companies like Quality Premier Services have the potential to give all umbrella firms a bad name so it is important that we work to redress the balance and reassure the supply chain that we are working hard to rid the industry of such cowboys.”