Increased use of umbrella companies due to new off-payroll rules

The extension of off-payroll working rules to the private sector in April 2021 appear to have resulted in an increased use of umbrella companies conclude the House of Lords’ economic affairs Finance Bill subcommittee.

It called for the external research commissioned by HMRC into the implementation and impact of the new regime to be accelerated made more comprehensive and its findings published in full.

Chair of the subcommittee Lord Bridges of Headley said: ‘The whole point of the off-payroll reforms was to crack down on tax avoidance. Yet as we warned the government in our subcommittee’s report in 2020 it risks giving rise to a new wave of tax avoidance as people — many of them on low incomes — end up in rogue umbrella companies. The government must take action to protect workers from ‘rogue’ operators as a matter of urgency.

‘The government...