RACS Group are delighted to sponsor the feature article on Umbrella companies in the May edition of Recruitment International. The article focuses primarily on compliance issues and the credentials of various Umbrella companies operating in the marketplace.

Terry Hillier, RACS Group’s managing director, provides insights into the current industry landscape still adjusting to HMRC’s clampdown on offshore Umbrella companies and potential tax avoidance issues for recruitment agencies.

RACS Group are one of the most stringently audited Umbrella companies in the UK and their dispensation received HMRC approval in February 2013. We encourage agencies to read the feature carefully and consider the potentially severe implications of using non-compliant Umbrella’s as their third-party payroll providers.

To download the full article in pdf format click here.

To read the article online, click here and go to page 33.

Supply Teachers Warned of the Perils of Offshore Umbrella Companies

The fallout from the Chancellor’s decision to clampdown on the activities of offshore Umbrella companies in the March 2013 Budget Statement, has started to be addressed by various industry unions and not least the education sector.

The NASUWT, the largest teachers’ union in the UK, published a stark warning to supply teachers who might be blissfully unaware that their employment ‘intermediaries’ are not paying all employment taxes on their behalf.

In the union’s April newsletter [click here to view their April Bulletin], it was suggested that many supply teachers are being pressurised by certain employment agencies to agree to be employed by an umbrella company as a condition of being offered work. Often, the teachers have no knowledge that their payroll provider is located offshore and that their tax position might be compromised.

As one of the leading UK-based umbrella payroll providers in the education sector (among others), RACS Group fully supports both the Treasury’s position and the sentiments expressed by NASUWT. RACS Group wishes to reiterate that adherence to all facets of compliance and HMRC guidelines sits at the heart of our company ethos, processes and procedures.

As a company, RACS Group has audit standard approval and trade body affiliation status with no less than eight independent organisations, working hard to meet and exceed each one’s specific criteria. But don’t just take our word for it… In fact, RACS Group would also like to remind agencies and contractors alike of the following quote from HMRC following a recent and lengthy review of the company’s compliance credentials (February 2013).

All agencies in the education sector and all other sectors besides are invited to contact RACS Group to discuss their current outsourced payroll provision with one of our compliance specialists.

RACS Group appreciates the apprehension caused by the potential threat of debt transfer, non-compliance or any notion of tax avoidance and have a variety of HMRC-reviewed solutions to provide agencies with outstanding levels of compliance achievements, full indemnity guarantees, industry leading commercial referral schemes (conforming to HMRC VAT requirements), total peace of mind and much more!…

For more information, please contact RACS Group today on 0845 604 0571 and ask for Adam Jordan (National Account Director). Alternatively, you can email Adam here.

In light of recent news that HMRC has “issued letters of debt transfer to the i4 Group” and the decision by Legitas to only provide a PAYE model to temps, RACS Group is re-issuing this newsletter to reiterate that HMRC are totally satisfied with RACS Group’s dispensation, processes and procedures as per the following quote:

HMRC CONFIRM THEY ARE SATISFIED RACS GROUP DO NOT OPERATE A ‘PAY DAY BY PAY DAY’ UMBRELLA MODEL

HMRC have confirmed that they are completely satisfied that RACS Group is not operating a ‘Pay Day by Pay Day’ contractor umbrella model following a thorough exploration into their payroll processes and procedures.

It should be stated from the outset that RACS Group invited HMRC to forensically examine every element of their umbrella operation as part of the company’s unwavering commitment to compliance and transparency.

The results of the extensive review were confirmed in an official letter from HMRC delivered to RACS Group’s Warminster headquarters on the 13th February 2013. The letter also stated that RACS Group’s umbrella dispensation remains completely valid and under current guidelines, should not be subject to any further review for the next five years.

Interestingly, it was also noted throughout this process that where a ‘Pay Day by Pay Day’ model was being used by some companies, there was actually no need for any type of HMRC dispensation (more worryingly, that all existing dispensations could be revoked) – further proof that RACS Group remain a solid leader in our specialised sector.

Managing Director Terry Hillier commented: “As a business RACS Group adheres to all aspects of compliance as a matter of course, but ever-evolving government legislation was the key factor in actually inviting HMRC to review every facet of our business model. It has been an arduous task and arguably one that was fraught with risk, but given the seriousness of the issue we just had to feel confident in our processes for the good of all our clients, contractors and the long-term future of the business.”

With umbrella companies being increasingly scrutinised by HMRC, this announcement only serves to strengthen RACS Group’s position as one of the UK’s most compliant outsourced payroll provider. As a rule we are suggesting that you request a copy of all dispensations from your current provider. Ask yourself: is it more than 5 years old and due a review? And more importantly, ask: has this been issued by a Special Employer Compliance Unit?

Typically, a ‘Pay Day by Pay Day’ model usually breaches the National Minimum Wage by offsetting expenses below this amount – thus the minimum amount of PAYE Tax and NIC’s are not actually being paid. The second element to this model is clearly defined as ‘fully reimbursed expenses’ – if your umbrella does not do this then they are likely to get caught under these rules!

As most of us are aware of a recent High Court Case involving a Large Employment Agency (who ran their own in-house expenses processing procedure) lost their appeal with potential tax liabilities amounting to £158 million. To view more details of the case, please click here.

RACS Group welcomes enquiries from agencies wishing to work with a truly compliant UK-based contractor umbrella brand that has their interests at heart, as much as their own.

As predicted, Chancellor George Osbourne has targeted offshore tax evasion loopholes in his Budget speech of 20^th March 2013. Ground-breaking agreements with the Isle of Man, Guernsey and Jersey is expected to generate £1billion over the next five years with the proposed new legislation potentially affecting many offshore-based payroll providers among others.

Please read the transcript below which has been quoted directly from the Chancellors 2013 Budget Statement.

READ MORE »

RACS Group’s new offices were formally opened by Dr. Andrew Murrison, MP, at champagne reception of Friday 8th March 2013. The Directors of RACS Group were joined by almost 100 invited guests including local councillors, contractors and suppliers who worked on the project, plus friends and family of RACS Group Managing Director, Terry Hillier.

Named RACS Group House, the new state-of-the-art offices feature cutting edge workstations, designer furniture and a stunning open plan layout adorned with the characters which have become such an integral element of the RACS Group brand.