The government of the United Kingdom has evoked or amended various rules and Acts within its legislature. Such initiatives are taken by the authority to ensure a transparent and restricted atmosphere within the vicinity of the employment sector.
After the implementation of the Criminal Finance Act 2017, the intermediary organisations, such as the Umbrella companies, have become a concern regarding its security measures as Her Majesty's Revenue and Customs (HMRC) expects the managing committee to be committed to create an aware and responsible working environment.
What is the Criminal Finance Act 2017?
To summarise, the Criminal Finance Act 2017, is the modified version of the Proceeds of Crime Act 2002. The amended version of the Act had surfaced on 27th April 2017. Moreover, the 3rd part of this Act focuses upon the tax evasion of the government, and the foreign tax evasion. This, in turn, has placed intermediary companies, such as the Umbrella companies, in a tight spot.
Such organisations are directly entangled with the HMRC, and the legislation can convict the companies, if they fail to avert malicious activities of tax evasion, within their domain.
What is the purpose of a Preferred Supplier List?
Amongst the different measures opted by an Umbrella company, developing a vigorous PSL or a Preferred Supplier List has become mandatory. Other than that, to monitor the process more efficiently, a PSL can be expected to come handy.
To put it simply a Preferred Suppliers List is a pre-approved list of suppliers, about which the employers of an Umbrella company are aware of, and consider to do business with. There are a few reasons, for which an employer should carry out his duties through a robust PSL. The reasons are as follows -
- Since the incorporation of Criminal Finance Act 2017, it has become a priority of such agencies to evaluate the credibility of their suppliers. The managing committees are required to ensure that their suppliers also follow the regulations.
- There are a few Umbrella companies, which have previously offered a somewhat competitive rate to its contractors, and presently, such organisations are being unfaithful. By maintaining a PSL, the activities of such organisations can be monitored.
- If an agency sets up a contract with a non-compliant organisation, the agency is likely to face reputational charges.
- Umbrella companies will not be considered as genuine if that organisation goes through investigation and fails to meet the requirements of the HMRC legislation.
Screening the Umbrella companies checklist
Other than creating a robust Preferred Supplier List or PSL, an Umbrella company is also required to create a checklist for their employees. The PSL is needed to ensure that neither the suppliers nor any organisation are operating beyond the rule of the legislation while the checklist facilitates the work of the contractors.
Initially, there haven't been many changes in the checklist. However, the implementation of the Criminal Finance Act 2017, is said to bring a few advantageous changes. Moreover, the list can be downloaded through one's designated Umbrella company, such as the DNS Umbrella. There are a few aspects of the revised checklist that every employee should know. The changes are as follows -
1. Margins
It can be considered that an Umbrella company uses the term margin as a trend. It can be said that the company believes that, if a service is being charged with fees, then it becomes "vatable" while, margin does not include VAT. Further, the word is also described to use to convey that an Umbrella company directly employs a contractor.
2. Transparency
The checklist is also useful to ensure organisations credibility. The government of the United Kingdom has enforced National Insurance Contributions, Tax to suffice the nations' revenue. In such a place transparency has become essential, as different agencies are trying to distinguish themselves from other companies.
The idea is to provide an equal payment to each contractor, after taking out the margin from the equation. Therefore, if an Umbrella company offers you with a higher salary after taking out the margin, it becomes an indicator to convey that the intermediary agency can be non-complaint.
3. Regulations
Since the implementation of AWR, each Umbrella company becomes directly under its authority. Presently, there are still a few organisations which have not yet updated themselves according to the HMRC legislation. This too can be an indicator of a non-complaint company.
4. Employment benefits
An Umbrella company thrives on making a healthier environment for its employees by meeting their various needs. This, in turn, is the result behind numerous statutory benefits, an employee is entitled with. How an Umbrella company is providing such benefits, can convey the credibility the same.
Conclusion
The UK government is committed to develop a transparent employment sector, and so is the Umbrella company. As a part of the legislation, the organisation is focused on implementing various safety measures to create a better work environment, and to provide legitimate services.