IR35 & the Criminal Finance Act
- 3 mins Read
Earlier this year we wrote to you with information regarding IR35 and the impact of this on the healthcare sector (IR35 - an update March 2017). With further powers being granted to HMRC as of the 30th September 2017 (The Criminal Finance Act) IR35 has had its position consolidated and umbrella companies who were offering reported rates of up to 90% take home pay are now finding themselves very much on the wrong side of the law. However, what exactly has changed and how does it affect you?
Luckily, if you are a McGinley Healthcare candidate, the changes will have no effect on you whatsoever. We have always taken the stance that we want to protect our workers from being on the wrong side of the law and have worked with a PSL of umbrella companies that have been thoroughly vetted to ensure they meet regulatory requirements.
IR35 itself has not changed, but the Criminal Finance Act’s introduction now allows HMRC to put the onus of ensuring an umbrella company’s tax compliance on the agency itself rather than it being on the candidate supplied or the umbrella company. With wide spread reports of agencies now instructing their candidates to change umbrella companies immediately or run the risk of legal action from HMRC, it would seem like the act is doing its job.
For those unfortunate enough to have been using these illicit companies, not only must they put up with the headache of changing payment methods and the subsequent sizeable drop in their take home pay, there is the risk of being pursued for the extra money accrued erroneously. HMRC have been pursuing umbrella companies aggressively over the past 18 months, with a similar 2016 case leading to some locums receiving retrospective fines of up to £45,000.
Fortunately for our candidates, the Criminal Finance Act essentially reaffirms McGinley Healthcare’s position on Umbrella Companies. If an Umbrella Company was offering a take home rate that seemed far too good to be true, then unfortunately, it is.
Since forming two years ago, we have always taken an ethical stance on umbrella company payments and we are keen to remain as leaders in this area. To further reassure our candidates, for the past year we have been thoroughly vetting all umbrella companies in our use, a practice we have had in place long before it became a legal requirement for us to do so. Our vetting procedure confirms that the company meets HMRC’s stringent requirements as well as meeting the high client service care that we require for our candidates.
These umbrella company reviews are carried out every 6 months, with our next review now due. As ever we are keen to expand the choice of payment providers to all our candidates, ensuring they have total flexibility in their financial matters. Therefore, should any of you wish to nominate an umbrella company for us to vet, we would gladly receive your suggestion. Whilst we cannot guarantee that every umbrella company that is suggested will be considered in this review (there are hundreds out there!), or that every umbrella company we vet will be accepted, we can promise that we will continue to review every 6 months. Should a company receive many nominations and pass our strict vetting procedure, you can rest assured that they will be added to our preferred suppliers list.
You can send your suggestions to firstname.lastname@example.org and the results of the review will be sent out at the end of the month. Alternatively, if you’d simply like to discuss your current payment choice, would like some reassurance on your chosen payment plan or would simply like to have a chat about your payment options, then please give the team a call on 0330 024 1345 and we’ll be happy to help you, whatever your circumstance.