Then you’ll know that framework providers are tightening up on compliance. Some are now insisting on RTI submissions to prove that the necessary payments are going where they should. To HMRC.

Why are frameworks insisting on these new rules?

We’ve seen a market shake-up over the past few months. IR35 has pushed more workers into the sector and created an environment fraught with potential employment risks. Particularly for recruiters. We’ve seen mini umbrellas hit the headlines back in May. More recently the TUC have questioned the very existence of Umbrella providers. In fact, there’s a string of negative Umbrella headlines dating back to public sector Off Payroll (IR35) in 2017.

Maintaining compliance standards

It’s still fair to say that Umbrella is a viable option for employing and paying contracting professionals. You need to work closely with your Umbrella partners to ensure they are working within the rules. Are they happy to provide RTI submissions as further proof of compliance. If they don’t want to provide the RTI information, the alarm bells should be ringing! However, there are a couple of alternatives worth considering.

Looking at alternatives

You could bring contractors in-house on your own PAYE payroll and take on all employment responsibilities. You may need to employ more staff to cope with the additional work. Your costs and responsibilities will certainly increase. The third option would be to look at a PEO provider. Here you’d outsource much of the employment responsibilities and the time-consuming administration. Plus there are plenty of efficiency savings when using a genuine PEO supplier.

What is PEO?

PEO generally describes a payroll product or service (rather than a business). It is one of a handful of payroll options available to recruitment agencies to outsource their payroll function. It’s based on PAYE, and provides a partnership approach to employing workers, which ultimately benefits all parties.

Why consider PEO for your agency?

PEO payroll offers a fully transparent and safe alternative to Umbrella payroll with distinct advantages for contractors and agencies. Contractors are on full PAYE; they don’t pay a fee and there are no employer deductions on their pay slips. Given the choice contractors say they’d rather work with a recruitment agency that offers PEO.

Look for a genuine PEO provider

We’ve seen plenty of intermediaries start to offer a PEO option over the past year. However, in many cases it appears that it’s just a re-badging of an existing product. Summed up nicely by People Group CEO Terry Hillier:

“Our PEO is a safe harbour for agencies because, unlike other wannabe PEOs, our deliberate research and cooperation with HMRC has established the solid foundations of genuine joint employment which underpin real PEO. We’re not an Umbrella Company rejigged to look like a PEO provider. We’ve been trading the PEO model since 2017 with processes approved by HMRC. At a time when some intermediaries are misleading their agency partners or defrauding the taxpayer, People Group have invested in tools that further help agencies to attract and retain contractors and end-clients.“

Before bringing the PEO solution to the UK, People Group undertook a fact-finding mission in the US, where PEOs have been successfully operating since the 1970s. Following the trip, we contacted HMRC and asked them to review our contracts and PEO offering to be able to establish genuine PEO in the UK.

Find out more about PEO and the benefits for your business.

Request a no obligation review

If you have any doubts about elements of your payroll and compliance supply chain or processes, we recommend reviewing them as soon as possible. As industry experts we provide a complete range of 100% compliant payroll and compliance solutions tailored to fit the needs of our clients.

For a totally free, no obligation review of your payroll and/or compliance processing or to discuss your options get in touch today.