Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what recent assessment he has made of the adequacy of the obligations of employment agencies and umbrella companies under Chapter 10, Part 2 of The Income Tax (Earnings and Pensions) Act 2003.

Chapter 10, Part 2 of The Income Tax (Earnings and Pensions) Act 2003 (ITEPA) relates to the off-payroll working rules, which apply to engagements where a worker provides their services through their own intermediary. It does not apply to engagements where workers provide their services as an employee of an agency or umbrella company.

Under the off-payroll rules, employment agencies are responsible for passing the Status Determination Statement to the party below them in the labour supply chain. If they are the deemed employer, they will be responsible for operating PAYE on the engagement.

Umbrella companies are responsible for operating PAYE on payments to workers employed by them; these engagements do not fall within the off-payroll working rules in Chapter 10 of ITEPA.

On 30 November 2021, the Government published a Call for Evidence on the umbrella company market, inviting views on the role that they play in the labour market and the ways in which they interact with the tax and employment rights systems: https://www.gov.uk/government/consultations/call-for-evidence-umbrella-company-market