LITRG calls on gov to regulate umbrella companies

The Low Incomes Tax Reform Group (LITRG) has called on the government to implement regulation of umbrella companies.

So far the group claimed that the proposed legislation has not been implemented, which resulted in low-income workers continuing to be at risk of working through non-compliant companies.

Umbrella companies are businesses that take on agency workers and contractors as their own employees and as such, are required to deal with pay, tax and other employer obligations.

It said they are used increasingly by low-income workers in the labour market, and are often “poorly understood” with some non-compliant, umbrella companies that do not deal with their pay, tax and other employer obligations correctly.

Victoria Todd, Head of LITRG, said: “The government previously set out a number of proposals which would, if implemented, be the first steps towards regulation of the sector. It is disappointing that none of these proposals have been taken forward.

“Regulation would drive away those umbrella companies that do not respect employment law, which will help protect lower paid agency workers who are vulnerable to exploitation. As they are likely to be the umbrella companies that are also non-compliant with tax law, there is a potential double benefit.”