Professional Passport is the largest independent assessor of compliance for umbrella companies and all payment intermediaries. Not only do they audit companies against HMRC tax rules, they also test against all relevant legislation.
Since its creation in 2007, Professional Passport has been working closely with government departments and industry trade bodies to identify issues and design practical solutions to meet regulatory requirements. You can review the current compliance standards here Professional Passport are also clear on structures they cannot approve and if any contractor is offered any solution by a provider, whether approved or not, they should report this directly to Professional Passport using this form
Moreover, Professional Passport is fully independent and has no links with shareholders or investors that are agencies, end clients or providers.
All umbrella companies with the Professional Passport logo on FindYourUmbrella, have been assessed as compliant, and are actively recommended by Professional Passport.
Professional Passport’s accreditation standards are rigorously applied and supported by clear terms that allow removal of approved provider status immediately if a provider is found to operate outside the terms of the compliance review. The transparency of this and robust nature of the review will reassure contractors when they choose their umbrella companies for several main reasons:
- Professional Passport actively seeks feedback on providers ensuring the highest standards are maintained.
- The review is complete, meaning that all solutions actively marketed by a provider are reviewed following specific standards for each of them.
- Professional Passport requires complete transparency to contractors from all Payroll solutions they assessed as compliant.
— What made you come up with the idea of Professional Passport in 2007?
I had seen a growth in tax avoidance schemes being mass marketed to contractors, many were very technical in their application, and there was no way a contractor would have been equipped with the knowledge to understand these.
In many cases, it was the contractor who was holding all the risks, although they were not aware of this.
Following the introduction of the MSC Legislation and the significant changes that resulted I believed, as I still do today, that those operating responsibly and to the highest standards should be able to differentiate themselves in the market. Professional Passport was setup to deliver that positive differentiation.
We continually strive to keep our standards to the highest levels and feedback from recruiters, contractors and other providers is becoming a key part of the overall picture in maintaining high compliance standards.
— Based on your experience, what would you say is the biggest challenge today for contractors, when choosing their Umbrella Company?
There are still many providers out there offering schemes that we would not consider appropriate. They provide false reassurances to contractors knowing that ultimately it will be the contractor that ends up with the bill.
Contractors are lured by the higher returns offered and so want to believe the assurances provided. In simple terms all umbrella providers should return around the same amount as they all follow the same tax rules. Any large variation is a clear sign that something is going on that may not be right. We actively seek contractors’ feedback on any provider offering these arrangements.
— Why should contractors avoid ‘schemes’ and what are the risks of getting caught?
What contractors often do not appreciate is how easy it is for HMRC to identify them once a scheme is uncovered. Whilst many schemes may have operated openly for several years; this should not be taken as a confirmation of compliance.
All ‘schemes’ have an element of PAYE income, and so returns are made to HMRC on all participants. Once the scheme's arrangements are uncovered, HMRC has the full list of workers that used the scheme and will write to those people, often with demands for unpaid tax. We have seen this recently with loan scheme arrangements with many workers getting significant and totally unexpected tax bills from many years ago.
The risks of being caught are high, although it may happen many years later. HMRC receives a high level of information from the sector, and it is more about when they discover the issue and not if they discover the issue.
As previously highlighted, all providers should provide very similar returns as they all operate under the same tax rules. Any variance to this should be seen as a warning sign, not an opportunity.
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